Rival Digital Realty is latest to evaluate buying data center company
Interest in CyrusOne is ramping up a month after the Dallas-based firm reportedly began working with an advisor to explore its options, which include being sold.
The Lowdown: According to a Bloomberg report, three groups have explored the idea of making an offer for CyrusOne, which runs 48 data centers in North and South America, Europe, and Asia, and has hundreds of customers around the world.
The Details: CyrusOne rival Digital Realty Trust has most recently shown interest in buying its competitor, as have investment firms EQT Partners and Digital Colony Partners, which are teaming up on the efforts, Bloomberg said, citing unnamed sources. All of that comes on the heels of another group – comprising KKR & Co., Stonepeak Infrastructure Partners, and I Squared Capital – that’s reportedly interested in making a bid for CyrusOne, which has a market valuation of more than $8.5 billion.
The reported pursuit of CyrusOne – the company began working with an advisor after initial interest from third parties in buying it – is part of a larger active merger-and-acquisition (M&A) environment in the data center space as enterprises seek to leverage outside data centers rather than paying for and managing their own or to gain more space but don’t have the resources to pay for their own expansion efforts.
The Impact: The trend of organizations not wanting to own or operate their own data centers has been ramping up as more enterprises migrate their workloads and data to the cloud or use co-location facilities for their IT infrastructure, according to Synergy Research Group analysts. The ripple effect of this is that data center providers are looking to expand quickly through acquisitions, which is fueling the M&A push in the industry.
Background: Analysts expect the buying spree to continue over the next five years. In the first half of the year, 52 data center M&A deals closed, an 18% jump over the number during the first six months of last year and more than all such deals in 2016. Since the start of 2015, more than 300 deals have closed, with all of them having an aggregate value of more than $65 billion. Digital Realty and Equinix have been the most active buyers over the past four years, accounting for 36% of the total deal value during that time, according to Synergy Research. CyrusOne also was named as a “serial acquirer” in the industry.
The Buzz: “Demand for data center assets has intensified as infrastructure managers flush with cash look to capitalize on the trend of companies relying on third parties for managing their data,” Bloomberg reported. “REITS [real-estate investment trusts] that specialize in data centers have also been seeking to expand globally through acquisitions.”