According to a Reuters report yesterday, we could see another big merger in the data center space. Digital Realty Trust is said to be taking a close look at Telx, and a $2B+ deal could be in the offing.
With Equinix now buying Telecity and other deals of various sizes simmering elsewhere, consolidation in the data center world is quite hot these days. A bid for Telx makes plenty of sense for Digital Realty, which has done well in assembling a massive amount of raw colo square feet under its REIT banner but has had less luck branching out into adjacent parts of the market. Telx’s interconnection business could give them a significant leg up in that department.
Meanwhile, for Telx’s private equity backers at ABRY and Berkshire, the timing would be just about right. They teamed up four years ago this summer to buy the company, which had been considering going public prior to that. I’m sure they’d be ready to cash out if the price were right, and rumors suggesting that the company might be for sale trickled out earlier this Spring. No price tag was given on the earlier purchase by ABRY and Berkshire (anyone know offhand?) but I’m guessing $2B would give them a reasonable payday.
Telx operates 20 data centers totalling 1.3M square feet of space and facilitates some 50,000 network connections. Data Center Realty’s portfolio spans 130 properties totaling some 24.7M square feet, and until pausing for 2014 had been adding 1-3M square feet of space annually, mostly but not entirely through acquisition. They’re definitely due for a move of some sort.
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Berkshire which also owns Lightower Fiber
How magical… the absolute dinosaur of wholesale space and power, married to the dinosaur (and industries biggest a-holes) of the MMR and cross connect.
I can’t wait to see what it produces!