Datacenters are hotter than ever, and we're not talking about rack temperatures

Updated figures from Synergy Research Group show the datacenter market was even hotter last year than thought, with mergers and acquisitions (M&A) topping $73 billion in value and showing no sign of slowing down.

The research biz previously disclosed stats that pointed to a record $57 billion worth of deals being closed in 2024, driven by high demand for cloud services and AI.

However, a "huge deal" that was expected to close this year was actually signed and sealed before the end of December, forcing a revision of the data. That transaction was a Blackstone-led purchase of AirTrunk, an Australian hyperscale data centre specialist building bit barns across the Asia-Pacific and Japan. The takeover is said to be worth almost $16 billion.

The previous high point for datacenter M&A activity was in 2022, as Synergy earlier noted, with the aggregate value of all deals closed during that year coming in at $52 billion. In 2023, there was something of a drop-off with the value of takeovers falling by about 50 percent to $26 billion.

As far as 2025 goes, Synergy reports that over $7 billion worth of deals have already been approved, and another $15 billion in value has been agreed but not yet formally closed. This means that the first quarter of this year could well see $22 billion in purchases – almost as much as for the whole of 2023.

Another $20 billion worth of possible future deals are in the pipeline, where companies are seeking new sources of funding or considering strategic options.

Synergy claims to have logged a total of 1,514 takeovers in the datacenter market with an aggregate value of $324 billion since 2015. Most of this comes from company acquisitions, but the figures also include equity investments, joint ventures, acquisitions of individual datacenters, and purchasing of land for new facilities.

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Before 2024, the four largest historic deals were in the $10 billion range and closed in 2021 and 2022, including CyrusOne, Switch, CoreSite, and QTS.

Aside from the Blackstone buy of AirTrunk, the biggest deals closed in 2024 were two separate equity investments in Vantage Datacenters, which had a combined value of $9.2 billion. That biz also received a $3.1 billion equity investment for its EMEA operations.

Apart from the rapid rise in M&A activity over the past decade, the most notable feature of the datacenter market has been the influx of private equity money flooding the market. Synergy says this accounted for 54 percent of sales in 2020, rising to 65 percent in 2021, and climbing to the 80-90 percent range since then, a sign that investors see this as a sector liable to make good returns.

Driving all of this is the insatiable demand for cloud services and other applications, though this has been "supercharged" by generative AI requirements, and private equity funding has continued to flow, Synergy says.

In addition to cloud computing, Synery Researhc chief analyst John Dinsdale, said social networking and a range of both consumer and enterprise digital services are boosting the need more for datacenters.

"There is no end in sight to this trend, with generative AI technology and services adding a further boost to already strong demand.".

"Looking at pending deals and the future pipeline, there is plenty of evidence to suggest that 2025 will be another boom year for datacenter M&A," Dinsdale added. ®