Data centre M&A deals soared to a total of $20bn in 2017, surpassing the total for 2015 and 2016 combined.
Synergy Research Group found that 48 deals closed in 2017, a huge jump from previous years as 2015 and 2016 combined saw just 45 deals.
Last year, there was almost one significant M&A deal closed every week, with the largest transaction in the year being Digital Reality’s $7.6bn acquisition of DuPont Fabros. A further 12 deals were valued at between $100m and $1bn, in addition to 38 smaller deals closing at up to $100m.
In addition to the number of deals increasing, the data from Synergy Research showed that the value of deals also increased – 2017 M&A deals hit a total value of $20bn, in comparison to 2015 and 2016 where only a handful of deals reached $1bn or above.
Synergy Research further revealed that Digital Reality and Equinix have been the most active companies in the M&A space, with a combined total spend of $19bn between 2015 and 2017.
The surge in M&A activity in the data centre market can be attributed to improving IT capabilities and cloud providers, rather than the ownership of data center assets, with a growth in outsourcing.
“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.”
Going into 2018, there are four major deals that were agreed in 2017. These are expected to close in the New Year with a combined value of close to $2.6bn.