24 Apr Report: In just four months, data center M&A deals surpass 2019 levels
It has taken all of four months for the value of closed data center deals to eclipse the total for all of 2019, according to Synergy Research Group (SRG.) Data center mergers and acquisitions were spurred by Digital Realty’s $8.4 billion deal to buy Interxion, which closed last month, as well as two other billion dollar plus deals that have also closed this year.In addition to those acquisitions, SRG said there have been two other deals that that were valued at over $500 million so far this year. To date, SRG has identified 28 data center-related acquisitions that have closed in 2020.
Over the past four years, the trend has been for the number of deals to increase sharply, but in the last two years the aggregate value has dropped off due to a lack of mega deals being closed. That scenario has flipped in the first four months of this year, according to SRG. Digital Reality’s acquisition of Interxion was the largest ever in the data center sector.
Sponsored by Nokia
TSN transport networks will play a crucial role in 5G network evolution
Learn how time-sensitive networking (TSN) for fronthaul can help you meet the transport convergence, capacity, latency, synchronization and resiliency requirements of 5G networks.
Expect the data center M&A sector to burn bright this year, according to SRG.
“This will be a bumper year for data center M&A activity,” said John Dinsdale, a chief analyst at Synergy Research Group, in a statement. “In less than four months the M&A value has already surpassed 2019, in addition to which we are aware of 17 more agreed deals that are pending closure plus a few other potential multi-billion dollar deals.
“What is causing this surge in M&A? Outsourcing trends and the aggressive growth in cloud services are driving ever-growing demand for data center capacity, which in turn is fueling both industry restructuring and a need to find new sources of investment capital.”
SRG said that since the start of 2015, there have been a total of 388 data center-related deals that have closed, with an aggregated value of $90 billion. Since that year, the aggregated deal value has been equally split across the public company buyers and the private equity buyers, but the private equity buyers accounted for 57% of the volume.
RELATED: Digital Realty closes $8.4 billion deal to buy Interxion
Over the past five years, the biggest deals to close were the acquisitions of Interxion and DuPont Fabros by Digital Realty, the acquisition of Global Switch by a group of Chinese investors and the acquisitions of Verizon data centers and Telecity by Equinix.
Over the 2015-2020 period, the largest investors, by a wide margin, have been Digital Realty and Equinix, the world’s two leading colocation providers. In aggregate they account for 35% of total deal value over the period. Other notable data center operators who have been serial acquirers include CyrusOne, Iron Mountain, Digital Bridge/DataBank, NTT, GI Partners, Carter Validus, GDS, QTS and Keppel.
Colocation facilities are taking on added importance as enterprises embark on their digital transformations. Enterprises and service providers are moving into colocation facilities so they can connect to the cloud, to IoT applications and services, and to other enterprises and service providers.
A colocation site is a data center facility where a business can rent space for servers and other computing hardware. Most colocations include the building, cooling, power, bandwidth and physical security, while the customer provides servers and storage.
Earlier this week, Equinix announced that it had signed a joint venture worth more than $1 billion with Singapore sovereign wealth fund GIC to build three data centers in Japan to serve the needs of hyperscale companies.
Sorry, the comment form is closed at this time.