New data from Synergy Research Group released Jan. 3 revealed that the total value of significant data center-oriented merger/acquisition transactions that closed in 2017 reached $20 billion, far surpassing the total for 2015 and 2016 combined.
Entering 2018, there are also four additional major deals that have been agreed upon but not yet closed, with a total value of more than $2.6 billion. On average through 2017, there was almost one significant M&A deal closed every week.
The largest transaction in the year was Digital Realty’s $7.6 billion acquisition of DuPont Fabros, but there were four other deals that were valued at $1 billion or more, involving acquisitions by Equinix, Cyxtera, Peak 10 and Digital Bridge.
There were another 12 deals that were valued in the $100 million to $1 billion range, and 31 smaller deals that were each valued at up to $100 million. By comparison with the 48 deals closed in 2017, 2015 and 2016 combined saw only 45 deals, of which three were in the $1 billion-plus range. The largest deal in those two years was the Equinix acquisition of European retail co-location provider TelecityGroup for $3.8 billion.
Duing the 2015-2017 period, by far the largest investors have been Santa Clara, Calif.-based Digital Realty and Redwood City, Calif.-based Equinix, the world’s two leading co-location providers. In aggregate they spent $19 billion on acquisitions of data center operators, which excludes the pending acquisition of Metronode by Equinix.
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, 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 co-location facilities, or sale and leaseback of data centers.
“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.”
Synergy provides quarterly market tracking and segmentation data on IT and cloud related markets, including vendor revenues by segment and by region.