Fundamental Stock Analysis: InterXion Holding N.V. (INXN) - The European Data Center Legacy

It is crucial to note that InterXion Holding N.V. (INXN) no longer trades as an independent public company. In March 2020, InterXion was acquired by Digital Realty Trust, Inc. ($DLR$) in an all-stock transaction valued at approximately $8.4 billion enterprise value.

Therefore, a fundamental analysis of InterXion today is primarily an analysis of how its assets and business strategy have been integrated into, and now contribute to, the financial performance and long-term outlook of the acquiring company, Digital Realty ($DLR$).

Fundamental Stock Analysis: InterXion Holding N.V. (INXN) - The European Data Center Legacy

The following article analyzes InterXion's fundamental profile leading up to the acquisition and its enduring contribution to the combined entity.

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1. Pre-Acquisition Fundamental Profile of InterXion (INXN)

Prior to the acquisition, InterXion was one of Europe's leading providers of carrier- and cloud-neutral colocation data center services. Its fundamental strength was built upon four key pillars:

A. Core Business Model and Market Position

InterXion operated in the highly specialized and rapidly growing data center industry, focusing on colocation and interconnection services.

• Carrier-Neutrality: This was a core strength. InterXion's data centers allowed customers to connect to a vast ecosystem of telecommunications carriers and cloud providers without being tied to a single one. This communities of interest approach created a powerful network effect, making its hubs—especially in major European cities like Frankfurt, Amsterdam, Paris (the "FLAP" markets)—highly attractive and defensible.

• European Focus: The company had a strong, concentrated presence in 11 European countries and 13 metro areas. This regional expertise was highly valuable, as it allowed INXN to navigate the continent's fragmented regulatory and market landscape effectively.

B. Financial Growth and Profitability

The data center industry is capital-intensive, which often results in significant depreciation and lower reported net income, leading analysts to focus on cash flow metrics.

• Strong Revenue Growth: Due to the booming demand for cloud and digital infrastructure in Europe, InterXion consistently reported high annual sales growth.

• Key Cash Flow Metrics (Pre-Acquisition): As a data center operator, investors valued INXN using multiples of EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) or Adjusted Funds From Operations (AFFO), rather than the traditional Price-to-Earnings (P/E) ratio. High EBITDA margins signaled efficient operations and strong pricing power.

• High Development Pipeline: A key fundamental driver was its active development pipeline, which represented a significant expected expansion of its critical load capacity, signaling strong embedded growth potential for the coming years.

C. Valuation Drivers

At the time of the acquisition, InterXion commanded a premium valuation due to its unique assets:

• Interconnection Value: The high number of connections (cross-connects) within its facilities made its assets strategic.

• Scarcity of Assets: Prime, well-connected land for data center development in dense European city centers is scarce, adding a premium to INXN's land and facilities.

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2. Post-Acquisition Analysis: Contribution to Digital Realty (DLR)

The acquisition of InterXion by Digital Realty was a transformative event for the data center industry. INXN's fundamental value is now reflected in the combined entity, which operates under the Digital Realty ($DLR$) ticker.

A. Strategic Synergy and Scale

InterXion's primary contribution to DLR was a dramatic expansion of its global footprint and a shift in its business mix:

• Global Platform: The deal created a leading global data center provider, leveraging DLR's massive presence in the Americas and Asia-Pacific with INXN's deep European roots.

• Product Complementarity: DLR was traditionally a leader in wholesale data centers (large, hyperscale requirements), while INXN was strong in retail colocation and interconnection. The merger enhanced DLR's ability to offer a complete "full-spectrum" solution—from a single rack to a full building—across a global platform.

• European Leadership: The acquisition instantly positioned the combined company as the largest colocation provider in Europe, capturing approximately 70% of the continent's GDP coverage.

B. Financial Impact on DLR

The integration of InterXion's high-growth, interconnection-focused European portfolio impacts DLR's fundamental metrics:

• Revenue Diversification: InterXion's successful European portfolio diversified DLR's revenue streams, reducing reliance on North American markets.

• Cost of Capital: As part of a larger, investment-grade Real Estate Investment Trust (REIT) like DLR, the former InterXion assets gain access to a lower cost of capital. This is a significant advantage for funding its ongoing, capital-intensive development pipeline, enabling more profitable expansion.

• AFFO/Share Growth: The scale and cost efficiencies expected from the combined operations are a key driver for DLR's long-term Adjusted Funds From Operations (AFFO) per share growth, which is the primary profitability metric for REITs.

C. The Enduring InterXion Legacy

The legacy business, now branded "Interxion, a Digital Realty company," continues to focus on:

• Interconnection Hubs: Maintaining and growing the highly valuable, carrier-neutral hubs in key European markets.

• Development Potential: Executing on the high-value land holdings and development projects in major European metros, which ensures a strong pipeline of future revenue.

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3. Investor Takeaway

For investors interested in the fundamental value previously held by InterXion, the focus must shift entirely to Digital Realty Trust, Inc. ($DLR$).

The DLR investment thesis is now a combination of its global scale and the high-growth, high-interconnection European footprint acquired from INXN. Any fundamental analysis of DLR must now factor in the robust revenue growth, development pipeline, and high network value that the former InterXion assets bring to the table, especially as global demand for cloud computing and AI-driven infrastructure continues to accelerate.