NEXTDC steps up stake in data centre group

Craig Scroggie (NEXTDC)

NEXTDC's (ASX:NXT) Asia Pacific Data Centre Group (APDC) (ASX:AJD) takeover offer may have lapsed, but that hasn't stopped it from making a boardroom run for the company.

NEXTDC told shareholders on 18 September that it had achieved a 29.2 per cent interest in Asia Pacific Data Centre Group securities, after continued efforts to buy up a controlling stake in the data centre property group.

APDC is a special purpose real estate investment trust (REIT) which was established to own properties – including land and buildings – that are operated or being developed as data centres.

The sole assets of the publicly-listed group, which was spun off by NEXTDC as an independent entity several years ago, are three data centre properties, Sydney (S1), Melbourne (M1) and Perth (P1), all of which are occupied by NEXTDC under long-term lease arrangements.

NEXTDC is aiming to buy back ownership of the company.

"Consistent with our strategy since 2015, we intend to own a greater proportion of the properties we operate," NEXTDC CEO, Craig Scroggie, said previously.

The data centre operator has now issued a statement on the ASX, which mentioned its successful interest in APDC, adding that it will “now evaluate developments when key information becomes available.”

NEXTDC has been slowly increasing its stake in the company. At the end of July, the company had an 18.6 per cent stake in APDC at a cost of $38.2 million.

Before that, on 18 July, NEXTDC told shareholders it had acquired a 14.1 per cent stake in the property company in a bid to fend off 360 Capital Group’s move to take control of the company via the 19.8 per cent stake it claimed earlier this year.

APDC told shareholders on 1 September that it had received a new proposal from 360 Capital Group, with the fresh proposal set to hand investors $1.95 per share.

This offer came just weeks after NEXTDC announced a takeover offer to acquire all the securities of APDC not owned by the company.

At the time, the data centre operator put forward a proposal for a conditional offer to acquire all of the ordinary, fully paid, stapled securities that it does not already own at $1.85 per security.

It has since been revised to $1.87 cash per security, with payment made within seven business days of acceptance by APDC securityholders.

But, the offer is now off the cards – the company revealed that its unconditional all-cash offer of $1.87 per security for APDC lapsed on 15 September.

Now, NEXTDC has requested that two of its company nominees to be appointed as directors on the board of the company, matching its level of ownership in APDC.

The initial stake and the proposed follow-on acquisition of APDC is said to be funded from NEXTDC’s existing cash reserves.

In end August, NEXTDC posted a $23 million net profit after tax (NPAT) for the year ending June 2017, a significant change from FY16 $1.8 million NPAT, representing a boost of $21.2 million.

At the time of writing, NEXTDC’s shares were trading at $4.70 while APDC’s shares were trading at $1.96.