CyrusOne Stock Jumps On Sale Rumor

The $9.5 billion market cap data center giant is currently exploring a potential sale, according to a report.

CyrusOne’s stock price is surging in the wake of a report that the data center giant is exploring a potential sale and is currently working with investment bank Morgan Stanley.

The Dallas, Texas-based real estate data center specialist, which has a market cap of a $9.5 billion, saw its stock climb nearly 7 percent today to $77.53 per share, nearly hitting a record high. The jump in stock comes after a report by Reuters today saying CyrusOne is exploring strategic alternatives that include a potential sale of the company, citing people familiar with the matter.

The news comes after CyrusOne CEO Bruce Duncan abruptly left the company. In August, CyrusOne’s board of directors said it has “separated” with Duncan as CEO along with his resignation—approximately just one year after he was selected to lead the company.

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CyrusOne did not immediately respond to a request for comment.

This isn’t the first time reports of CyrusOne eying a potential sale has sprouted up over the past few years. In 2019, for example, it was reported that data center behemoth Digital Realty was looking to acquire its data center rival CyrusOne, which never occurred. Reuters says there is no certainty that CyrusOne’s exploring a sale will result in any deal.

CyrusOne generated $285 million in revenue during the second quarter of 2021, up 11 percent year over year. However, net income fell 84 percent year over year to $7 million in the second quarter of 2021.

The worldwide data center M&A market has been on fire over the past 18 months, according to market data by research firm Synergy Research Group.

Data center-oriented M&A deals are reaching record-breaking heights in 2021 as investment firms continue to acquire data center operators as demand for computing capacity and space skyrockets.

In June, the largest data center acquisition in history was unveiled with global investment firm Blackstone Group entering into a definitive agreement to acquire data center provider QTS Realty Trust for $10 billion. Blackstone’s acquisition of QTS brings the total value of closed and pending M&A data center deals in the first half of 2021 to more than $23 billion, according to Synergy Research Group.

With the explosion in data being generated and processed, along with the boom in enterprise and cloud markets, data centers are becoming “a hot ticket” in the M&A arena particularly for private equity and global financial investments firms, John Dinsdale, a chief analyst at Synergy Research Group Dinsdale, told CRN.

“The almost inexhaustible demand for data center capacity has led to a drive to find new sources of capital funding and there continues to be a long list of willing investors,” said Dinsdale.

Synergy expects data center M&A in 2021 to end up matching or potentially surpassing M&A acquisition spending levels of 2020, which reached a record $32 billion.

CyrusOne operates over 50 data centers on a global basis.