Data Centre M&A Deals For 2020 Surpass 2019 Numbers Despite COVID-19 Pandemic
The value of data centre related M&A deals that closed in the first sixteen weeks of 2020 has already surpassed that of the 2019 total, despite the COVID-19 pandemic.
In the last four years, the trend has been for the number of deals to increase sharply, while in the last two years the aggregate value dropped off due to a relative lack of mega-deals being closed, according to data from Synergy Research Group.
That situation has reversed in the first months of 2020, largely due to the $8.4 billion acquisition of Interxion by Digital Realty, which is the largest ever data centre transaction.
Two other billion dollar-plus deals have closed so far this year as well as two that were valued at over $500 million.
Synergy Research Group identified 28 data centre-oriented M&A deals that have closed this year.
Since the beginning of 2015, the research group said it has identified 388 closed deals with an aggregated value of $90 billion.
Over the period, the aggregated deal value has been split equally between public companies and private equity buyers, while private equity buyers have accounted for 57% of the deal volume.
“This will be a bumper year for data centre M&A activity,” said John Dinsdale, a Chief Analyst at Synergy Research Group.
“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 centre capacity, which in turn is fuelling both industry restructuring and a need to find new sources of investment capital.”
Since 2015 the largest deals to be closed are 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 centres and Telecity by Equinix.
The largest investors have been Digital Realty and Equinix. In aggregate they account for 35% of total deal value over the period of 2015 to 2019.
Other data centre operators who have been serial acquirers include CyrusOne, Iron Mountain, Digital Bridge/DataBank, NTT, GI Partners, Carter Validus, GDS, QTS and Keppel, according to the research group.