$10bn QTS acquisition points to record for annual mergers and acquisitions

08 June 2021 | Antony Savvas

Cover

The confirmed $10 billion acquisition of QTS Realty Trust by Blackstone - the biggest data centre acquisition ever seen - means the annual value of data centre mergers and acquisitions is moving towards a new record in 2021.

Less than six months into the year well over $6 billion of deals had already closed or were moving to completion, so with the QTS transaction taking the total to approaching $17 billion, this year is set to surpass the record set in 2020 - which broke the $30 billion barrier.

The Synergy Research chart below includes publicly known about deals and others it believes are pending.

The QTS deal includes a 40-day “go-shop” period, which means it is possible an alternative buyer may come in with an even bigger bid.

That wouldn't be a complete surprise as QTS has a large international data centre footprint, a revenue growth rate that is well above the industry average and a strong presence in each of the top six US metro markets.

Prior to the QTS deal, the biggest data centre M&A deals were Digital Realty’s $8.4 billion acquisition of Interxion, Digital Realty’s $7.6 billion acquisition of DuPont Fabros and the acquisition of Global Switch by the Jiangsu Shagang Group of China - which was eventually valued at over $8 billion in transactions that were spread over three years.

John Dinsdale, a chief analyst at Synergy Research Group, said: “The data centre and colocation market has been constantly evolving over the years and this will continue. The almost inexhaustible demand for data centre capacity has led to a drive to find new sources of capital funding and there continues to be a long list of willing investors.”

The purchase price of QTS represented a premium of 21% on its closing share price as of 4 June, and providing no one else comes in to buy it, the Blackstone transaction is expected to close in the second half of 2021.

Upon completion of the deal, the parties expect that QTS will continue to be led by its senior management team and maintain its corporate headquarters in Overland Park, Kansas.

Chad Williams, chairman and CEO of QTS, said: “We are confident this transaction is the right step to achieve our strategic objectives in our next phase of growth.”

Following closure, QTS’ common stock will no longer be listed on the New York Stock Exchange. QTS will be jointly owned by Blackstone Infrastructure Partners and Blackstone Real Estate Income Trust (BREIT).

QTS has a data centre footprint spanning over 7 million sq ft across North America and Europe.