2014 M&A Review: Datacenter and Cloud Edition

December 30th, 2014 by · 1 Comment

And now the final installment of my review of M&A in the sector this year, taking a look at the data center and the more significant cloud-related deals.  Note that I won't be able to delve into many of the smaller players, not because I'm not interested but because one person can only keep up with so much.  But should I miss one that you think I shouldn't, feel free to leave a comment with a link!

Perhaps the biggest deal that didn't happen was over at Rackspace, which spent a good piece of the year rather publicly considering strategic options. After months of speculation from across the sector, Rackspace decided not to sell itself at all, at least not yet.  Other large cloud operators that made moves generally did so to bring new talent and products in house.  For instance, CenturyLink bolted on some new functionality with the acquisition of Data Gardens, and Cisco went out and absorbed Metacloud into its Intercloud. We did see another network operator buy its way deeper into the cloud business, as Canada's Shaw bought Viawest, giving it a regional colo and cloud footprint aimed at the enterprise market in the western US.

On the communications side of the cloud, the order of the day was again the deals that didn't happen. Mitel tried to buy Shoretel and expand its US business, but its pickup line failed miserably. Meanwhile, Alteva adopted a poison pill in response to an unsolicited buyout offer. One combination that did make it to the table though was Vonage's deal for Telesphere for $114M, giving them a deeper SMB presence and building on the Vocalocity deal a year before.

In the more general world of colocation, the biggest players were relatively quiet but there was brisk activity among the mid-sized and regional operators. Digital Realty, DuPont Fabros, CoreSite, and Equinix weren't very active inorganically, although Equinix did follow up in Brazil by bringing ALOG fully in-house.  But QTS bought a big facility in NJ that came with a solar farm, Tierpoint bought Xand from ABRY Partners, Fortune and Infomart merged their footprints, and Amerimar and Hunter Newby teamed up again to buy 717 South Wells in Chicago. Gold Data Centers bought one facility in Las Vegas while selling another in Sacramento.

And in the somewhat more specialized world of interconnection-focused colo, Zayo made two deals this year before going public in the fall. Back in March they bought CorExchange, and over the summer they purchased AtlantaNAP. Meanwhile, Cologix made another key move down in Florida with the purchase of Colo5, their second purchase in Jacksonville coming along with some interesting space further inland in Lakeland. Both companies seem likely to make further such moves next year if the opportunity arises.

Ok, what did I miss?  Tell me and I'll add it.  Next up for tomorrow: I'll break out the crystal ball again with specific predictions for 2015.

Categories: Cloud Computing · Datacenter · Mergers and Acquisitions

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  • Grant Lewis says:

    Good article. One area you missed was what happened to EarthLink’s strong push into the Cloud services space? Since the leadership change earlier in 2014 their overall strategy pertaining to Cloud has seemingly been de-emphasized. Seems like they had a decent momentum going building a business that was going to offset the decline in the traditional dial up consumer isp business but it has largely been changed to focus on attachment services associated to multi-location customers. Not sure the advantage or attractiveness of that strategy when its widely known in the partner community EarthLink’s ability to deliver services in a manner that is competitive (time frame and done right the first time) and with high quality of experience is challenged – it might be a reason that the partner channel which was a big producer of new sales at EarthLink has larglely decreased since 2012.

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