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Data center giants Equinix & Digital Realty make 2017 a record year for M&As

09 Jan 2018

2017 was the year of the data center.

Well, at least in terms of the number of mergers and acquisition that took place, equating to $20 billion.

This figure far surpasses the total for 2015 and 2016 combined, according to new data from Synergy Research Group.

Entering 2018, there are also four additional major deals that have been agreed to but not yet closed that are worth over $2.6 billion.

On average, there was almost one major deal closed every week in 2017. The largest transaction of the year was Digital Realty’s $7.6 billion acquisition of DuPont Fabros, but there were four other deals that were valued at a billion dollars or more, involving acquisitions by Equinix, Cyxtera, Peak 10 and Digital Bridge.

An additional twelve deals were valued at $100 million to $1 billion range. 31 smaller deals with each valued at up to $100 million.

To put it into perspective, in 2017, 48 deals were closed, whereas 2015 and 2016 combined there were only 45 deals with other three entering the billion-dollar range. The biggest deal from 2015 and 2016 was the Equinix acquisition of European retail colocation provider TelecityGroup for $3.8 billion.

“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.”

“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.”

Both Equinix and Digital Reality were identified by Synergy’s data as, by far, the largest investors, which is no surprise considering they are the world’s two leading colocation 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.

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