Competition heats up for Australia data center business

NextDC offered A$1.85 per share for APDC, valuing the business at A$213 million ($168 million), according to a disclosure. The price represents a premium to a previously announced offer by property funds manager 360 Capital, though a slight discount to the July 25 closing price of A$1.86. The stock made no significant shift following the announcement, closing at A$1.85 on July 26.

The offer is conditional on APDC providing NextDC with access to due diligence information. There is also a minimum acceptance condition of 50.1%. By comparison, 360’s offer has no minimum acceptance condition, and the firm dropped its initial requirement that APDC replaces its management with that of its subsidiary 360 Capital FM.

In a separate announcement 360, which already holds a 20% stake in APDC, said that the REIT’s board had agreed to grant the firm access to due diligence information. 360 expects its due diligence to take about three weeks.

NextDC owns 18.6% of APDC, which manages data centers in Sydney, Melbourne, and Perth that house NextDC’s storage operations. NextDC is APDC’s sole client and has long-standing ties to the REIT, whose co-founder Robin Khuda worked at NextDC for three years before leaving to launch Singapore-based data center provider AirTrunk in 2014.

360’s offer for APDC, which is also backed by additional unnamed investors, has drawn criticism from both the REIT and NextDC.

APDC’s critique focused on 360’s announcement of its proposal at the same time as its push to change management, which would effectively allow 360 to respond to its own takeover bid. Meanwhile, NextDC refuted allegations that it has refused to engage with 360 on its proposal and placed undue pressure on APDC’s directors.

APDC’s business is highly profitable: in its most recent annual report, the company recorded a net profit of A$31.7 million for the year ended June 2016, on revenue of A$34 million. This represents a rise from the previous year of A$26.2 million in profit and A$28.9 million in revenue.

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• Topics
• Australasia
• Infrastructure
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• Buyouts
• Australia
• buyout
• TMT