APDC board supports NextDC acquisition proposal

The APDC board of directors has backed NextDC's proposal to acquire remaining shares at AU$1.87, though the property trust might be receiving a competitive offer from 360 Capital.
Written by Tas Bindi, Contributor

Asia Pacific Data Centre Group's (APDC) board of directors has unanimously recommended that the property trust accept NextDC's offer to acquire remaining shares for AU$1.87 a share.

At the end of July, NextDC, which has a 21.1 percent stake in APDC, updated its acquisition proposal, increasing its per-share price from AU$1.85 to AU$1.87.

NextDC's latest offer represents a 19.5 percent premium over APDC's closing share price of AU$1.565 on May 1, the day before rival bidder 360 Capital acquired its initial 19.9 percent stake in the property trust for AU$1.56 a share.

In the absence of a better deal -- 360 Capital's offer of AU$1.80 per share remains unchanged as of Monday -- APDC's shareholders backed NextDC's offer, citing an independent report that described the offer as fair and reasonable.

Once formally accepted, NextDC would be paying approximately AU$215 million from its existing cash reserves within five business days.

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 financial year. Separately, M1 is valued at AU$80 million, S1 at AU$95.3 million, and P1 at AU$37.5 million.

NextDC has previously said that it has excess liquidity of more than AU$460 million as of June 30, 2017, inclusive of cash reserves and a senior corporate debt facility.

Rahul Badethalav, investor relations manager at NextDC, told ZDNet last month that the datacentre company -- which is the sole tenant of APDC's datacentre facilities -- was prompted to submit an acquisition offer because of concerns around 360 Capital as a potential landlord.

He added 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," Badethalav said previously.

360 Capital, which called for and eventually withdrew a meeting to oust APDC's management and take over the trust's leadership in July, was denied a seat on the board.

360 Capital claimed at the time that APDC and NextDC had both refused to engage in its proposal, which the latter said was "highly conditional" and reflected "poor corporate governance".

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

The property trust recently completed its three-week due diligence process, and reports suggest that 360 Capital will submit another offer by the end of the week.

360 Capital has not yet responded to ZDNet's request for comment.

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.

Updated 12:30PM AEST August 31, 2017: NextDC's stake in APDC corrected.

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