M&A datacentre deals continue to grow

Specialist datacentre operators looked to mergers and acquisitions in 2018 to meet demand

M&A

The number of datacentre-oriented mergers and acquisitions (M&A) saw significant growth in 2018, according to Synergy Research Group.

The big driving factor behind this rise in M&A deals is being put down to more and more enterprises looking to outsource to specialist datacentres, who in turn are seeking to expand their reach to meet the demand. 

However, despite the total value of closed deals in the year, it still fell short of the 2017 peak. Last year saw 68 deals closed with an aggregate value approaching $16 billion. According to the research, there were five billion-dollar-plus deals in 2018, but none of these could match the scale of the 2017 acquisition of DuPont Fabros by Digital Realty or the Equinix acquisition of Verizon's datacentres.

Instead, 2018's largest deal, the 25% stake sale in Global Switch to a group of Asian investors, was valued at 2.1 billion. The other four deals that were valued at a billion dollars or more involved acquisitions by Digital Realty, Iron Mountain, GTT and Brookfield Infrastructure Partners.

Further down the price range, there were another 18 deals that were valued in the $100 million to $1 billion range and 45 smaller deals that were each valued at up to $100 million, taking the total value of M&A activity over the 2017/18 period was over double the total for the previous two years.

"There is a clear trend towards enterprises not wanting to own or operate their own datacentres, as CIOs focus more on features and services that they can provide to their internal clients and less on the complexities of running datacentres," said John Dinsdale, a chief analyst and research director at Synergy Research Group.

"As enterprises increasingly look to various outsourcing options, this is driving specialist datacentre operators to increase both the scale and the reach of their datacentre footprint. This bulking up is often best accomplished, or speeded up, by acquiring other data entre operators. We expect to see a lot more data entre M&A over the next five years."

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