APDC board recommends 360 Capital's acquisition offer over NextDC

APDC's board is now in favour of 360 Capital's AU$1.95-a-share acquisition offer, a month after it approved counterbidder NextDC's offer.
Written by Tas Bindi, Contributor

Asia Pacific Data Centre Group's (APDC) board of directors has unanimously recommended the acceptance of 360 Capital's offer to acquire remaining shares in the property trust for AU$1.95 a share.

A spokesperson from APDC said it's now up to its shareholders to accept or decline the offer, which is scheduled to close on November 6, 2017.

The latest board recommendation comes a little over a month after it supported the AU$1.87-per-share offer put forth by rival bidder NextDC in July out of concern around 360 Capital as a potential landlord.

NextDC at the same said it would be paying approximately AU$215 million from its existing cash reserves within five business days of receiving formal shareholder approval.

360 Capital then on September 15 updated its proposal, increasing its per-share price from AU$1.80 to AU$1.95, as well as making the offer unconditional to "give certainty" to shareholders.

The property trust's offer represents a 24.6 percent premium over APDC's closing share price of AU$1.565 on May 1 -- the day before it acquired its initial 19.8 percent stake in APDC -- and a 3.7 percent premium over NextDC's last offer of $1.87 per share.

APDC's share price rose the day 360 Capital submitted its latest bid, at one point reaching AU$1.965 per share, it said in a disclosure to the Australian Securities Exchange (ASX).

According to APDC's board, the latest offer "exceeds the fair market value range" based on advice from third-party experts.

The board additionally said that if 360 Capital's bid is unsuccessful, and no better proposal is submitted, "there is a risk that the price of APDC securities may trade below the offer price of AU$1.95."

In a bidder's statement, 360 Capital said it intends to remove APDC from the ASX and replace its board of directors once it acquires 90 percent of shares, or is in a position to cast the majority of votes at a general meeting with APDC shareholders.

360 Capital had called for and eventually withdrew a meeting to oust APDC's management and take over the leadership in July, claiming at the time that APDC and NextDC had both refused to engage in its proposal.

NextDC had criticised 360 Capital's initial offer for being "highly conditional" and reflecting "poor corporate governance".

360 Capital's subsequent acquisition proposal had removed the caveat of replacing APDC's board of directors.

NextDC, which is the sole tenant of APDC's datacentre facilities in Sydney, Melbourne, and Perth, recently increased its share of voting stock from 25.6 percent to more than 29 percent, but has not provided any indication to ZDNet as to whether it will be submitting a new offer.

Rahul Badethalav, investor relations manager at NextDC, had previously told ZDNet that there are "meaningful benefits" for customers in being the datacentre operator as well as the owner of the land that sits underneath the datacentres.

"Naturally, given our datacentres sit on the land itself, it would be a fairly straightforward transaction to make," he said in July.

360 Capital said it would be funding the acquisition through its existing cash reserves and borrowings within seven business days of receiving formal acceptance by APDC shareholders.

As of June 30, 2017, APDC reported its three Australian datacentres in Sydney, Melbourne, and Perth are valued at AU$212.8 million, up 13.8 percent from AU$187 million in the 2016-17 financial year. Separately, M1 is valued at AU$80 million, S1 at AU$95.3 million, and P1 at AU$37.5 million.

In its full-year financial report, APDC reported a 16.5 percent surge in profit from AU$31.7 million in the 2015-16 financial year to a record AU$36.9 million in the 2016-17 financial year.

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