RENO, Nev. — New data from Synergy Research Group shows that 52 data center-oriented merger and acquisition (M&A) deals closed in the first half of 2019, up 18% from the first half of 2018 and continuing a strong growth trend seen over the last four years. The number of deals closed in the first half exceeded the total amount closed throughout the entire year of 2016. This year is in line to be another record year for data center M&A deal volume, with eight more deals having closed since the beginning of July, 14 more that have been agreed upon with formal closure pending, as well as the regular flow of M&A activity. In total, since the beginning of 2015, Synergy has now identified well over 300 closed deals with an aggregated value of over $65 billion. Acquisitions by public companies have accounted for 57% of the deal value, while private equity buyers have accounted for 53% of the deal volume.
In terms of deal value, the story is a little different from deal count, as the trend is skewed by a very small volume of multibillion-dollar acquisitions. Eleven such deals were closed during the 2017 and 2018 period, while 2019 has yet to see a multibillion-dollar deal closure. Since 2015, the largest deals to be closed are the acquisition of DuPont Fabros by Digital Realty, the Equinix acquisition of Verizon’s data centers, and the Equinix acquisition of Telecity. Over the 2015 to 2019 period, two of the largest investors have been Equinix and Digital Realty, both colocation providers. In aggregate, they account for 36% of total deal value over the period. Other notable data center operators who have been serial acquirers include CyrusOne, Iron Mountain, Digital Bridge/DataBank, NTT, and Carter Validus, according to Synergy.
“Analysis of data center M&A activity helps to affirm some clear trends in the industry, not least of which is that enterprises increasingly do not want to own or operate their own data centers,” said John Dinsdale, a chief analyst at Synergy Research Group. “As enterprises either shift workloads to cloud providers or use colocation facilities to house their IT infrastructure, more and more data centers are being put up for sale. This, in turn, is driving change in the colocation market, with industry giants on a never-ending quest to grow their global footprint and a constant ebb and flow of ownership among small local players. We expect to see a lot more data center M&A over the next five years.”