Posted By Jason Verge On December 20, 2013 @ 8:00 am In Deals | No Comments
The theme this year was small, targeted acquisitions as well as acquiring complementary technology. There were a lot of one-off facility acquisitions to expand into smaller, emerging markets as well as a continuing trend of sale-leasebacks. Two tech giants, BMC and Dell, went private. While we highlight ten noteworthy deals of 2013, it’s important to note the quantity of smaller deals that occurred throughout the year.
Acquisitions during 2013 were more targeted and strategic for the most part. There were some blockbuster deals, such as IBM’s acquisition of SoftLayer and NTT’s acquisition of RagingWire, but single facility acquisitions were the big trend.
“We went out and looked for partners that can accelerate what we could become,” said SoftLayer CEO Lance Crosby. “We chose IBM for this, as well as several other reasons such as data center locations, access to technology, and what has become really apparent the last few months, the people.”
IBM has made more than a dozen strategic acquisitions around cloud since 2007. IBM cloud revenue grew by 80 percent in 2012, and the company expects to reach $7 billion annually in cloud revenue by the end of 2015. The company known for completely revamping its business model several times throughout the ’80s, ’90s and ’00s has done it again: IBM can safely be called a cloud company.
In a move that will dramatically expand its presence in the U.S. data center market, Japan’s NTT Communications acquired an 80 percent equity interest in RagingWire Data Centers for $350 million. The deal more than doubled NTT Com’s data center footprint in the U.S. with an additional 650,000 square feet of space. RagingWire has annual revenues of approximately $85 million, and has been growing at about 30 percent a year. The company began construction of a 150,000 square foot data center in Sacramento, as well as plans to build 1.5 million square feet of space in Ashburn.
NTT could make this list twice in the same week, also announcing it would pay $525 million to acquire Virtela Technology Services, a Denver-based firm that specializes in managed network services, including software-defined networking (SDN) and enterprise cloud services. Between them, the Virtela and RagingWire deals represent an $875 million investment by NTT in the global data center market.
Carrier Hotel One Wilshire is an iconic building, often seen dotting the Los Angeles skyline in movies. Private equity firm GI Partners acquired One Wilshire, the leading carrier hotel in Los Angeles and one of the most wired buildings in the world. The reported deal price of $437 million reinforced the premium value of data center real estate.
The company also acquired a Telx-operated data center in Clifton, New Jersey, as well as hit paydirt with IBM’s acquisition of SoftLayer. The company led the buyout of SoftLayer in 2010.
If you see a Starbucks in a bad neighborhood, there’s a good chance that that neighborhood is up and coming. It’s because the company spends millions annually figuring out which neighborhoods offer a promising future. The same could possibly be said of Digital Realty Trust in terms of data center markets, in that the company strategically buys into the most promising up-and-coming markets. The largest data center REIT expanded its footprint with acquisitions of properties in Osaka, Amsterdam, Bay Area, Austin, Minnesota, Toronto, Paris and Sydney.
The company didn’t complete one single deal that stands out from the rest, but rather smartly acquired single facilities and smart portfolios in markets that are either emerging or growing rapidly. It also acquired fully-leased facilities during the year, representative of a larger sale-leaseback trend in the industry.
Here’s a rundown of the company’s activity in 2013:
CenturyLink continues to build its cloud computing operation through acquisitions. CenturyLink (CTL), which previously bought up Savvis and AppFog, acquired public cloud provider Tier 3. CenturyLink said Tier 3’s products will form the foundation of its cloud strategy and anchor the new Seattle-based CenturyLink Cloud Development Center.
Verizon entered into a definitive agreement to acquire CDN provider EdgeCast Networks in December. The combination of complementary capabilities from Verizon, a prior acquisition, upLynk, and EdgeCast, further boosts performance of Verizon Digital Media Services’ end-to-end services.
Data center management is hot, and investors are picking up on the trend. BMC was acquired by private investors for approximately $6.9 billion. There are several reasons why BMC would choose to go private. At the top of the list is the flexibility it provides from a strategic standpoint. Answering to investors is difficult, particularly in times of technological paradigm shifts such as these cloud days.
PC and server vendor Dell Inc. agreed to be taken private in a $24.4 billion leveraged buyout led by Silver Lake Partners and Michael Dell, the tech industry legend who founded the company in his dorm room and built it into a juggernaut.The long-rumored deal came at a crucial point in the life of the company, which is facing challenges to its core markets for PCs and volume servers, and is seeking to build its own suite of cloud computing services.
The year was rife with hosting provider acquisitions. Internap acquired iWeb, GoDaddy bought MediaTemple, and Hostway was acquired by private equity. But perhaps the biggest hosting provider to get acquired in 2013 was Host Europe Group. Cinven Group acquired the European web hosting provider for approximately $667 million from Montagu Private Equity.
Western Digital spent over a billion on acquisitions boosting its SSD storage offerings. Western Digital acquired Virident Systems  for $685 million. The deal positions Western Digital’s HGST unit for growth in the market for server-side Flash solutions
Article printed from Data Center Knowledge: http://www.datacenterknowledge.com
URL to article: http://www.datacenterknowledge.com/archives/2013/12/20/top-10-data-center-ma-deals-2013/
URLs in this post:
 IBM Acquires SoftLayer: http://www.datacenterknowledge.com/archives/2013/07/08/ibm-closes-softlayer-acquisition/
 Japan’s NTT Acquires RagingWire: http://www.datacenterknowledge.com/archives/2013/10/28/ragingwire-data-centers-is-acquired-by-ntt-communications/
 GI Partners acquires One Wilshire: http://www.datacenterknowledge.com/archives/2013/07/18/gi-partners-buys-one-wilshire-for-437-million/
 CenturyLink Acquires Tier 3: http://www.datacenterknowledge.com/archives/2013/11/19/cloud-building-continues-as-centurylink-acquires-tier-3/
 Verizon Acquires CDN Provider EdgeCast Networks: http://www.datacenterknowledge.com/archives/2013/12/09/verizon-acquire-cdn-edgecast-networks/
 BMC Acquired by private investors: http://www.datacenterknowledge.com/archives/2013/05/06/bmc-to-be-acquired-by-private-investor-group/
 Dell buyout led by Silverlake: http://www.datacenterknowledge.com/archives/2013/02/05/dell-confirms-24-billion-buyout-with-silver-lake/
 Host Europe Acquired for $667 million: http://www.datacenterknowledge.com/archives/2013/07/23/host-europe-acquired-for-667-million/
 acquired Virident Systems: http://www.datacenterknowledge.com/archives/2013/09/09/western-digital-acquires-flash-storage-specialist-virident/
 a definitive merger agreement: http://www.datacenterknowledge.com/archives/2013/06/26/western-digital-adds-enterprise-ssd-with-340-million-stec-acquisition/
 Jason Verge: http://www.datacenterknowledge.com/archives/author/jasonv/
Copyright © 2012 Data Center Knowledge. All rights reserved.