Datacentre M&A doubles in 2017 as service providers offload facilities

Market reversal continues as providers offload datacentre facilities to the tune of £20bn in 2017

The value of datacentre M&A doubled to $20bn (£14.8bn) last year as service providers continued to offload facilities in favour of public cloud and colocation agreements, according to Synergy Research Group.

The market watcher said there was at least one "significant" deal secured every week last year, with datacentre giants Equinix and Digital Realty among those splashing the most cash.

The largest deal of the year saw Digital Realty acquire DuPoint Fabros for $7.6bn, while four other deals were valued at over $1bn, Synergy said.

John Dinsdale, chief analyst at Synergy, said: "Above all else, what is driving the datacentre M&A activity is enterprises focusing more on improving IT capabilities and less on owning datacentre assets.

"That shift is driving huge growth in outsourcing, whether it is via cloud services, use of colocation facilities, or sale and leaseback of datacentres.

"The dramatic growth of cloud providers is also driving changes in the datacentre industry, as datacentre operators strive to help them rapidly increase scale and global footprint. We expect to see much more datacentre M&A over the next five years."

On top of the $20bn that changed hands last year, four deals worth a combined $2.6bn have been confirmed but not yet completed.

The mass sales mark the reversal of a trend from five years ago, when integrators and telcos were pouring investments into their own facilities.

Last year Equinix EMEA president Eric Schwartz told CRN that the advancement in cloud computing, and the increasing difficulty of running a datacentre, were two of the factors behind the sell-off.

In the UK Daisy is one of the largest players to consider its datacentre strategy, announcing last year that it would be looking to offload its datacentre and focus more on Microsoft Azure and colocation deals.