2022 Data Center M&A Deal Value Closes in on 2021 Record After Three Quarters
RENO, NV, October 14, 2022
New data from Synergy Research Group shows that 140 data center-oriented M&A deals closed in the first nine months of the year with an aggregate value of $30 billion, while there is an additional $17 billion of pending deals in the pipeline that have been agreed but have not yet officially closed, most of which are expected to close before year end. After adding in the regular flow of transactions that happen with little advance public notice, 2022 could end up matching the record-breaking M&A activity levels that were seen last year. Synergy logged 216 deals that closed in 2021 with an aggregate value of over $49 billion, 42% up from the 2020 total of $34 billion, which itself was a record year at the time. A notable trend in the industry has been the recent influx of private funds. In the 2015-2018 period private equity buyers accounted for 42% of deal value. In 2019 to 2021, as the overall level of M&A activity ballooned, private equity share of the total deal value increased to 65%, while in the first three quarter of 2022 private equity share has jumped to over 88%. The highlights for this year have been the $15 billion acquisition of CyrusOne by investment firms KKR and Global Investment Partners, and the pending acquisition of Switch by DigitalBridge for $11 billion. The 2021 highlights were the acquisitions of CoreSite and QTS, each for around $10 billion. These deals represent the four highest value acquisitions the industry has ever seen. All four acquired companies feature in the worldwide top 15 ranking of colocation operators, while they are ranked three through six in the US market, behind only Equinix and Digital Realty. Prior to these four record-setting transactions, the biggest data center M&A deals were Digital Realty’s $8.4 billion acquisition of Interxion, Digital Realty’s $7.6 billion acquisition of DuPont Fabros, the Equinix acquisition of Telecity for $3.8 billion, the Equinix acquisition of Verizon’s data centers for $3.6 billion 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. Apart from these mega deals, some of the most notable serial acquirers have been Equinix, Digital Realty, EQT, DigitalBridge/Vantage, CyrusOne, GDS, GI Partners, Keppel, Macquarie, Mapletree and NTT.
“There is an inexorable growth in the demand for data center capacity, with the main catalysts being a booming cloud market, rapid expansion of hyperscale operators and never-ending growth of digital services for both consumers and enterprises,” said John Dinsdale, a Chief Analyst at Synergy Research Group. “That is great news for data center operators but the trouble is that even the biggest of them can no longer fund the required growth directly, so they are increasingly turning to external investors or divesting non-strategic assets. At the same time, the booming data center ecosystem is like a magnet attracting the attention of cash-rich private equity firms that are hungrily seeking attractive long-term investment vehicles. There is no end in sight to the boom in data center M&A activity.”
About Synergy Research Group
Synergy provides quarterly market tracking and segmentation data on IT and Cloud related markets, including vendor revenues by segment and by region. Market shares and forecasts are provided via Synergy’s uniquely designed online database SIA ™, which enables easy access to complex data sets. Synergy’s Competitive Matrix ™ and CustomView ™ take this research capability one step further, enabling our clients to receive on-going quantitative market research that matches their internal, executive view of the market segments they compete in.
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