Data center M&A deals in 2017 leapt to $20b

04 Jan 2018

Data center M&A deals skyrocketed to nearly $20 billion in 2017, far surpassing the total for 2015 and 2016 combined, according to statistics from Synergy Research Group.

The research firm found that 48 deals were closed in 2017, a huge jump from previous years as 2015 and 2016 combined saw just 45 deals.

Last year, there was almost one significant M&A deal closed every week, with the largest transaction being Digital Realty’s $7.6 billion acquisition of DuPont Fabros. Four deals were valued at a billion dollars or more, which involved acquisitions by Equinix, Cyxtera, Peak 10 and Digital Bridge.

In addition, another 12 deals were valued in the $100 million to $1 billion range, and 31 smaller deals were each valued at up to $100 million, the research firm said.

Digital Realty and Equinix, the world’s two leading colocation providers, emerged as the largest investors over the past three years, spending a total of $19 billion on acquisitions. This figure doesn’t include Equinix’s $800 million acquisition of Australian data center operator Metronode, which is expected to close in the first half of 2018.

Equinix has made major acquisitions in all four regions of the world, while Digital Realty has focused on the United States and Europe. Other notable acquirers included CyrusOne, Peak 10, Digital Bridge, NTT, Carter Validus, Iron Mountain, Cyxtera and Elegant Jubilee.

“Above all else, what is driving the data center M&A activity is enterprises focusing more on improving IT capabilities and less on owning data center assets,” said John Dinsdale, a chief analyst and research director at Synergy Research Group.

That shift is driving huge growth in outsourcing, whether it is via cloud services, or use of colocation facilities, or sale and leaseback of data centers, he added.

“The dramatic growth of cloud providers is also driving changes in the data center industry, as data center operators strive to help them rapidly increase scale and global footprint. We expect to see much more data center M&A over the next five years,” Dinsdale concluded.

Going into 2018, there are also four additional major deals that have been agreed but not yet closed, with a total value of over $2.6 billion.

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