M&A Review 2016: Colo Edition

December 27th, 2016 by · 4 Comments

Yesterday I sifted through the year in M&A by network operators for North America.  Today let’s turn our attention to colocation and data centers:

We mentioned a few purchases of colocation facilities by network operators yesterday, but there actually weren’t too many.  Zayo bought two, Lightower bought one, and I’m sure that some of the other larger network deals came with colo in part as well, e.g. Windstream/EarthLink.  But deals by pure data center operators were relatively sparse this year, with two big ones really jumping out.

Equinix’s purchase of 24 data centers from Verizon was formally announced just three weeks ago, but didn’t come as a surprise to the markets.  Verizon had been considering something like this for years, and the year started with a rumor they were starting a process to monetize some 48 facilities — hmm, 24 more to go?  Equinix was of course always one of the likeliest buyers for the former Terremark and related facilities.  Equinix itself sold eight facilities to Digital Realty earlier in the year, but it was over in Europe.

Meanwhile, CenturyLink did much the same as Verizon, and this time it was a private equity group stepping forward to acquire the company’s data center assets, most of which we once knew as Savvis.  They are in the odd position of simultaneously selling a major data center footprint while buying another – that of Level 3 Communications.  The latter is more telco-focused of course, so perhaps they’ll keep it.  As for what that private equity group is up to, we are still waiting for the details on what should be an interesting story in 2017.

Another significant data center buy was made by Tierpoint, which bought CoSentry and its nine midwest data centers as the year began.  Tierpoint seems likely to continue its buying streak in 2017.

Other deals in the sector were often focused on a single market.  QTS took the Piscataway, NJ facility off of DuPont Fabros’ hands.  Netrality moved into St. Louis by acquiring two locations from Digital Realty Trust.  H5 Data Centers acquired NextFort out in Phoenix.

It felt like there were more, and I’m sure I’ve missed a few I shouldn’t have – speak up  in the comments below!  Of course there was plenty of organic activity, with properties bought to be developed and ground being broken.   But that’s a different story.  Tomorrow: Voice, Cloud, and Managed Services.

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Categories: Datacenter · Mergers and Acquisitions

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4 Comments So Far

  • mhammett says:

    I wonder if Equinix will repeat it’s Switch and Data situation and spin off lesser desired Verizon properties to someone like 365.

  • Rog says:

    I’m sure they will. Equinix has a very specific business model built around interconnection, carrier clients, and the customers who want to be close to the clients.
    They will hold onto and upgrade the few gems that were acquired like Miami, Bogota, Sao Paolo and I think one of the most important in the purchase, Culpepper. Eqx is trying to expand their customer base outside carriers and those who want to be close to the carriers so with this purchase they got a big bump into Gov’t contracting.

    I’m not sure who would buy the much less desireable data centers. I think Equinix will need to sell them in one off deals to the 365 and Cologix of the World who might want a specific geography unless private equity jumps in and wants to invest money in updating them. Maybe the consortium that just bought the CL data centers wants another dozen or so?

  • b says:

    I would also add vXchnge to the possible buyer list. After all, the sr. management are all former Switch & Data…

    Tierpoint as well.

  • Richard says:

    Can anyone provide multiples? that wold be most helpful

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