Hosting and Managed Services Market Commentary

  • The second quarter of 2019 has experienced significant consolidation activity across various sub-sectors, both locally as well as globally namely through larger take-private transactions and mergers of leading industry players;
  • The rapid growth of digital information and the persistent rise in the complexity of technological solutions continue to drive to drive demand for flexible and customisable professional services;
  • The continued roll out of 5G internet services is expected to spur demand for additional network infrastructure, including data centers;
  • Similarly to the prior quarter, Global IT Services and Webhosting peers outperformed global equity markets on average; and
  • The wave of consolidation recently witnessed in the global Hosting and Managed Services sector is set to continue with a number of local consolidators expected to ramp up their M&A efforts.

Hosting and Managed Services Taxonomy

Web Hosting

Refers to a service in which a vendor offers the housing of business-to-business or business-to-consumer e-commerce websites via vendor-owned shared or dedicated servers and applications for enterprises at the provider-controlled facilities

Selected Market Participants

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Managed Services

Refers to the delivery of network, application, system and e-management services across a network to multiple enterprises, using a “pay as you go” pricing model

Selected Market Participants

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IT Outsourcing

Refers to the use of external service providers to effectively deliver IT-enabled business process, application service and infrastructure solutions for business outcomes

Selected Global Market Participants

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Selected Recent HW Hosting and Managed Services Transactions

screen_shot_2019-08-13_at_10.14.51_am.pngProvider of mass hosting services for SMEs, including web hosting, domains, e-commerce and application solutions with leading positions in Belgium and Denmark and a growing presence in the Netherlands, Sweden and Switzerland

 

 

 

screen_shot_2019-08-13_at_10.15.33_am.pngProvider of services allowing SMEs to move their IT infrastructure and operations into the cloud, as well as providing end user support and consulting as part of a full-service IT offering

 

 

 

 

screen_shot_2019-08-13_at_10.16.17_am.pngProvider of web domains, shared web hosting and value-added services with leading positions in Sweden and the Czech Republic, and presence in Norway, Serbia, Slovakia, Spain, Netherlands, Germany and the UK

 

 

 

screen_shot_2019-08-13_at_10.18.14_am.pngProvider of managed technology services with national scale in the US and the capability to design, deploy and support technology solutions from cable to cloud

 

 

 

 

screen_shot_2019-08-13_at_10.18.51_am.pngProvider of SME focused hosting and cloud solutions, including domains website hosting, email for smaller customers and managed servers and applications for larger customers

 

 

 

 

screen_shot_2019-08-13_at_10.19.26_am.pngProvider of managed hosting and cloud solutions specialised in managed cloud hosting, desktop-as-a-service, security and connectivity

Market Observations

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*Group weighted average stock price performance over the past year based on market capitalisations

Select Hosting and Managed Services M&A Transactions

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Orange's Acquisition of SecureLink| Managed Services

  • Netherlands-based provider of cybersecurity services including specialised security consulting, security maintenance/support with 24/7 service desks and advanced managed detection/response capabilities
  • In 2018, SecureLink served over 2,100 customers across a broad range of industries
  • The acquisition enables Orange to become one of the European leaders in cybersecurity with strong positions in major local markets and a comprehensive cybersecurity services offering

 

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Combell Group's Acquisition of TransIP| Webhosting

  • Netherlands-based hosting and virtual private server provider
  • TransIP offers managed and unmanaged internet services to more than 400,000 customers, helping them to excel in their digital capabilities
  • The combined group will be rebranded as team.blue and will offer best-in-class products to over 1.2 million customers and to better enable companies and entrepreneurs to grow their businesses digitally

 

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Digital Colony Partners' and EQT's Acquisition of Zayo Group| Data Centers

  • US-based telecommunication infrastructure services firm providing mission-critical bandwidth to the world’s most impactful companies
  • Zayo Group has a 130,000-mile telecommunications network across North America and Europe
  • This take-private transaction aims to empower Zayo Group to further accelerate its growth and strengthen its industry leadership

 

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Tieto's Acquisition of EVRY| Local IT Services

  • Norway-based information technology company supplying services relating to computing, including operation, outsourcing and online banking
  • With combined revenue of c. €3bn and 24,000 professionals, the combined company will be well positioned to create digital advantages for Nordic enterprises and society
  • The merger will combine strong digital competences and industry software with advanced cloud and infrastructure services

 

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Acquisition of a Portfolio of Eleven Data Centers| Data Centers

  • Portfolio of eleven data centers located in seven jurisdictions (Spain, Brazil, USA, Mexico, Peru, Chile and Argentina)
  • The sale includes the signing of a housing services agreement, and Telefónica Group will continue to provide and manage the services it has been offering to its customers from these data centre facilities
  • This transaction is part of the Telefónica Group 's asset portfolio management policy based on a strategy of value creation, improving return on capital and strategic positioning

IT & Tech-Enabled Services – Trading Comparables

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IT & Tech-Enabled Services – Transaction Activity

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*Conversion to USD based on FX rate as of announcement date

IT & Tech-Enabled Services – Representative Landscape

Representative IT & Tech-Enabled Services Providers

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1. Factset; market data as of 30 June 2019

2. Merger Market

 

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