Synergy Research predicted that 2020 would be a ‘bumper year’ for data center deals back in April and the prediction proved correct. The total expenditure on data centers has crossed a sum of USD 30 million. With still a month to go, data center M and amp;A (Mergers and amp; Acquisitions) have already beaten the 2017 record and matches 2019’s record for the volume of deals.
John Dinsdale, Chief Analyst at Synergy Research, said the reason for the surge came down to four straightforward trends converging. “Burgeoning cloud usage requires ever-increasing data centre capacity; data centre providers need to keep on building and operating more data centres; more investment capital is needed to fund the bailouts; and positive long-term trends are attracting new investors,” said Dinsdale.
In October 2019, the acquisition of Interxion by Digital Realty for USD 8.4 billion boosted the economic conditions of 2020. Also, there were over five billion-dollar-plus deals, as well as USD 2 billion secondary share listing.
The Interxion acquisition by Digital Realty is one of the two biggest deals that has happened since 2015, and the other being DuPont Fabros’ acquisition. There were more acquisitions on the list, such as Verizon data centers, Telecity by Equinix, and Global Switch by Chinese investors.
In April, Synergy found that the deals cracked in 2020 exceeded those that happened in 2019. Even with the imposition of first lockdowns due to COVID-19, consensus held that there would be an upward shift in cloud services, and it has been proved. Still, according to John Dinsdale, the downward curve was noticed in transactions and due diligence activities.
The strategic combination of highly complementary businesses has accelerated their ability to serve customers globally by acquiring data centers.