Merger activity decreased last week with five new deals announced, three deals completed and one deal terminated.
Two of the five new deals announced last week were successful potential deals in the works. Accounting for a combined deal value of $25 billion, both of these companies are data center REITs.
Data centers have been a significant area of growth over the last couple of decades as more and more companies got comfortable with moving to the cloud and having a different company house their data and clusters of servers. The arrangement was a win-win as most companies no longer had to worry about physical security, backups, cooling the heat intensive server rooms, etc.
CyrusOne (CONE) and CoreSite (COR) agreed to be acquired in deals valued at $15 billion and $10 billion respectively, making them the largest deals in the data center industry so far. Earlier this year, Blackstone acquired QTS Realty for $10 billion and Cyxtera (CYXT) completed a SPAC business combination with Starboard Value Acquisition. Ranked by colocation and data center revenues, CyrusOne and CoreSite are the third and fourth largest data center operators in the US according to a report by Synergy Research.
We added CyrusOne to our list of potential deals on September 28, 2021, when Reuters reported that the company was exploring strategic alternatives that included a potential sale of the company. CONE’s price after this announcement was $77.57. KKR and Global Infrastructure Partners entered into a definitive agreement to acquire CyrusOne at a 25% premium on its closing stock price of $72.57 per share back on September 27. Headquartered in Dallas, Texas, CyrusOne operates 57 data centers internationally and 55% of its revenue comes from cloud customers.