Data centres set for future multi-billion dollar mergers and acquisitions – survey

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Eye on more M&A in data centre sector. Image: kevindean

Data centre M&A valued at over US$12.3 billion worldwide in 2011

By ECM Plus staff

ECM Plus +++ Mergers and acquisition activity in the datacentre sector for both businesses and property, generated more than US$12.3 billion in deal values globally in 2011.

The most active market is the USA followed by Britain and Australia, according to a review of finance and investment in the data centre sector, from research by consulting firm BroadGroup which assessed all publicly-available data across M&A and fund raising activity.

According to Broad, around 45% of all M&A deals were below US$100m, with a further 25% valued up to US$250m. But the year was dominated by mega-deals including the KKR, Silver Lake and Technology Crossover Ventures acquisition of hosting and domain provider Go Daddy at US$2 billion and the CenturyLink merger with Savvis valued at an estimated US$2.5 billion. The merger creates a new international player, with 48 data centres in North America, Europe and Asia.

The survey also found that a further US$6 billion had been raised in a range of funding rounds and IPOs in the sector across the year. Almost half of all transactions were in the US$100m to US$700m bracket and almost half used debt financing instruments.

J.P. Morgan Chase Bank/J.P. Morgan Asset Management led with the highest number of deal arrangements in the sector, followed by RBC Capital Markets and Barclays Capital in second place; Morgan Stanley and Seaport Capital were in joint third position.

Digital Realty, listed on NYSE has achieved the leading deal of the year raising US$1.5 billion in a Global Senior Unsecured Revolving Credit Facility in November, followed by Global Switch with a bond issue of €600m in April 2011.

“We believe that when we add these figures to the additional investment that has been made in extending, upgrading and constructing datacentres the financial scale of the sector has shifted substantially in 2011,” commented BroadGroup.

“These figures still discount the investments and acquisitions occurring in software, technology, and energy innovation to address the datacentre sector. The overall market is generating a significant level of cash and stakeholder value and it will be interesting to watch developments in the coming year.”

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