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$9B Data Center Operator CyrusOne Mulls Sale

Data center specialist CyrusOne may be for sale, Reuters reports, citing anonymous sources familiar with the matter. The company has a market capitalization of about $9B and is reportedly working with Morgan Stanley as it explores strategic alternatives.

Driven in part by the coronavirus pandemic, 2020 and 2021 have seen rising investor interest in data centers.

The Dallas-based company builds and operates data centers in the United States and Europe. It has enough land inventory in various markets to support more than 1,250 megawatts of potential build-out, CyrusOne interim CEO David Ferdman said during the company's most recent earnings call in July

CyrusOne stock rose about 1.6% by midday Wednesday after word of the potential sale broke. Since the beginning of 2021, its stock has gained about 9.1%. Over the past five years, CyrusOne stock is up about 65.8%.

Ballooning data usage, spurred by streaming services and virtual connectivity, inspired record demand for data centers in 2020, JLL reports, a trend that continued in the first half of 2021 as well. During the first six months of this year, data center absorption was 273.6 MW in 14 major U.S. markets, the second-highest amount since 2018, according to JLL. By far the most active market is northern Virginia, which saw nearly 120 MW absorbed during the first half of 2021.

Competition between Amazon, Microsoft, Google and others for cloud dominance is a factor in the sustained data center boom, with hyperscalers — the tech giants specializing in large-scale cloud computing — making up an increasing share of the data center industry.

Investors have taken note. In August, Blackstone completed its acquisition of QTS Realty Trust for about $10B, taking the company private. In July, Singapore-based Mapletree Industrial Trust inked a $1.32B deal to buy a massive portfolio of data centers in the U.S. Earlier this year, data center owner Cyxtera Technologies went public through a merger with Starboard Value Acquisition Corp. in a deal that valued Cyxtera at $3.4B.