With the acquisition by CyrusOne of the Zenium data centres about to complete, we heard news yesterday that AXA Investment Managers (AXA IM) – Real Assets have acquired all of the shares in DATA4 and its 15 data centres across Europe.  This comes amongst a significant number of mergers and acquisitions that have taken place, or will do, this year. It has been well publicised that Iron Mountain acquired EvoSwitch earlier this year. Ensono, the US headquartered Cloud and hosting provider, acquired Wipro’s data centre early in 2018. GTT acquired Interoute for a massive £2.3bn in February and the flurry of M&A activity doesn’t look like it will stop any time soon.

There is a question about what is driving all this M&A activity.  In many cases it is apparent that it is US and AsiaPAC companies seeking to expand their footprint into Europe. This may be driven, at least in part, by GDPR and a desire to be able to demonstrate that they are keeping their customers’ data safe. There may, however, be a whole raft of data centres coming up for sales in the not too distant future.

Many data centres were built originally around 2,000 and the early noughties. Many are now reaching, or at, end of life. They need significant upgrade and this presents a real problem for many data centre operators. Larger operators can afford to move their customers around … even between data centre facilities … whilst they carry out the necessary upgrades, but for smaller operators it is a different story. If they own and operate just one facility, for example, then how can they carry out the necessary upgrades in a live environment? For many, they simply can’t – and this may drive further M&A activity because for some the only route they can take is to sell to a larger operator who has the space, agility and funds to move customers around whilst the upgrades are completed.

Whatever the drivers may be, M&A activity is likely to continue for the foreseeable future. It is estimated that data centre acquisitions were valued at over $20 billion in 2017. 2018 is looking like it could well exceed that!



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