Mergers and Acquisitions

IT Channel Mergers, Acquisitions: $15 Billion In Combined Deals Since Monday

In a very busy two days for mergers and acquisitions, IT channel companies worth a combined $15 billion have traded hands since Sunday, December 4. The M&A activity isn't limited to a particular niche. Distributors, VARs, MSPs and CSPs each have sat down at the negotiating table to announce and/or finalize M&A deals in the past 48 hours.

Among the confirmed M&A deals we've been tracking over the past two days:

  • Equinix acquired Verizon's data center business for $3.6 billion. The move extends Equinix's network and cloud connectivity platform, essentially allowing channel partners to build hybrid clouds that extend from on-premises gear to data centers to public clouds like Amazon Web Services. Verizon has been seeking to sell the data centers since early 2016 because the company failed to keep pace vs. AWS and Microsoft Azure. Instead, Verizon will double down on its network services business.
  • Ingram Micro finalized its $6 billion sale to a Chinese logistics giant. The deal, first announced in February 2016, takes Ingram Micro private. CEO Alain Monie has vowed that it's "business as usual" within the halls of Ingram, though the distributor can focus on long-term goals rather than quarterly earnings demands from Wall Street.
  • KKR is acquiring Optiv Security for roughly $1.9 billion, according to ChannelE2E's sources. Optiv claims to be the latest pure-play IT cybersecurity solutions provider. Optiv had pursued an IPO in November, but ultimately shifts from one private equity owner to another.
  • GoDaddy acquired Host Europe Group for $1.79 billion. That deal also had been rumored since November. GoDaddy has been doubling down on SMB-focused hosting, cloud and SaaS applications. HEG gives GoDaddy a major European footprint. The company has also named a channel chief in recent days and is pushing into specialized developer niches like WordPress.
  • TDC acquired Adactic, an Office 365 channel partner in Denmark. Terms were not disclosed. Adactic is backed by a former Microsoft manager who previously helped to shape the software giant's cloud strategy in Denmark.
  • Consolidated Communications acquired FairPoint for $1.5 billion. That deal focuses on national fiber optic networks, data centers and associated managed services.
  • ePlus acquired Consolidate's IT services arm, which has deep Cisco Systems partner expertise in the Minneapolis, Minnesota area.

More Tech Companies Up for Sale?

Additional deals could be coming. ShoreTel has been seeking strategic alternatives (jargon for "a buyer") since August 2016. Avaya also has been seeking a potential buyer since May 2016 though bankruptcy rumors are swirling around the company.

December is typically a busy time for technology mergers and acquisitions. Tax considerations and New Year business strategies figure prominently into the timing of many deals.

Thanks to aging baby boomers, the overall M&A activity within the IT channel should continue to rise at least through 2022 or so before beginning to cool off dramatically around 2025 or so.

More: Track all VAR, MSP and CSP mergers and acquisitions by visiting the ChannelE2E Milestones section daily.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.