Takeovers Panel rejects NEXTDC request for support

NEXTDC CEO, Craig Scroggie

The Australian Government’s Takeovers Panel has decided not to get involved in the bidding war between NEXTDC (ASX:NXT) and 360 Capital Group (ASX:TGP) for control of Asia Pacific Data Centre Group (APDC) (ASX:AJD) – at least, for now.

On 9 October, NEXTDC submitted an application to the Takeover Panels against the 360 Capital Group’s bid to buy out the APDC, which houses a number of NEXTDC’s data centres in its built-for-purpose properties.

Ultimately, the data centre provider wanted all APDC shares that were acquired by 360 Capital on-market after the publication of its bidder’s statement for the company, and before the date of the corrective disclosure, it is requesting, be unwound.

According to the application, the bidder statement from 360 Capital discloses an intention that the APDC may make a contribution to its security shareholders after the close of the offer, which currently sits at $1.95 per security.

The problem raised by NEXTDC is that 360 Capital as security holders would effectively use this contribution to repay a debt facility available to fund its bid.

NEXTDC said that this would constitute financial assistance and require security holder approval and both the bidder and target’s statements do not disclose this information adequately, according to the data centre provider.

Now, however, the Takeovers Panel has said that any further disclosure would require speculation on various matters, including the circumstances at the time the proposed capital distribution is implemented.

As such, the Panel considers it unlikely that such speculation would “contribute to an informed market”.

“The Panel noted that NEXTDC has already highlighted its concerns in its announcement to the market on 26 September 2017, and 360 Capital responded to the announcement on 27 September 2017,” the Takeovers Panel stated.

“The Panel concluded there was no reasonable prospect that it would make a declaration of unacceptable circumstances. Accordingly, the Panel declined to conduct proceedings,” it said.

The refusal of the Panel to get involved in the drawn out bidding war for APDC comes as the company reveals that it has spent almost $1.4 million in fees related to the buyout proposals from bidding rivals, NEXTDC and 360 Capital, as of 25 August.

According to financial results filed with the Australian Securities Exchange (ASX), the data centre property group incurred $607,000 in costs related to a cancelled shareholder meeting called by 360 Capital on 28 June.

These costs occurred after the financial year end on 30 June 2017.

APDC also revealed that the group incurred $539,000 in costs in relation to the 360 Capital proposal and the NEXTDC offer, also costs paid after FY17.

Asia Pacific Data Centre Group 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 originally 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.