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​NextDC ends melodrama and gains APDC in AU$200m transaction

The datacentre provider has gone back in with an offer of AU$2 per security to acquire the remaining interest in Asia Pacific Data Centres.

NextDC has made another bid to wholly acquire the securities it doesn't already own in Asia Pacific Data Centres (APDC), with the parties agreeing on a AU$2 per share price as well as a AU$0.02 special distribution to shareholders.

In a letter to shareholders on Monday morning, APDC and majority owner 360 Capital said they have agreed to the acquisition, providing a superior bid does not come forth.

"The overall funding requirement for the APDC acquisition is expected to be approximately AU$200 million, comprising payments made to acquire the 70.8 percent of APDC securities not currently owned, repayment of APDC's debt, and transaction and restructuring costs," NextDC told the ASX on Monday morning.

"NextDC will fund the APDC acquisition from its existing cash reserves."

The company added that it would see AU$14 million in cash flow savings annually from the acquisition.

The offer will be open until November 26, 2018.

APDC was originally created as a real estate investment trust that was responsible for the buildings and land upon which NextDC operates its business, and, under the terms of the leases, NextDC has first right of refusal on any sale of the datacentres.

NextDC owns a 29.2 percent interest in APDC and currently leases three datacentres located in Perth, Sydney, and Melbourne -- known as P1, S1, and M1, respectively -- from it.

NextDC is APDC's sole tenant at all three sites.

360 holds a 67.3 percent interest, with the balance shared among other investors.

The parties have been battling for well over a year, with ownership of APDC changing in November following a bidding war between NextDC and 360 Capital, which saw the latter emerge triumphant with 67 percent ownership and subsequently install its preferred board members.

NextDC had offered APDC AU$210 million in cash for its facilities in July 2017 -- AU$0.05 per share higher than the offer made by 360 Capital a day prior.

Since 360 scooped up majority ownership, NextDC has been pushing to have the real estate trust underpinning APDC wound up, stating that it is unhappy with the direction 360 Capital is taking the company under its steerage.

During the holiday period, APDC pitched a sale price of AU$300 million for the three datacentres to NextDC, but the latter struck out, saying the valuation had no logic and was simply incorrect.

At the time, NextDC said APDC assets were valuated "only a few months ago" at AU$213 million.

APDC in February made NextDC a AU$280 million offer with the property trust of APDC explaining at the time the multimillion-dollar figure equates to a 5 percent initial yield and a premium of AU$67.2 million -- or 31.6 percent -- to the last valuation.

This was followed in April with a AU$265 million gentleman's agreement between APDC and NextDC CEO Craig Scroggie for APDC to acquire the former's interest.

It was later revealed that the Australian Securities and Investments Commission (ASIC) had conducted enquiries in April into the potentially misleading director valuation of APDC's portfolio and has left the case open to determine whether APDC complied with its obligations under the Corporations Act.

In the process of attempting to sell its assets, APDC took NextDC to court to request that the latter stop blocking potential buyers.

APDC argued in April that as a result of NextDC executing what it believed were its rights of first refusal under the datacentre leasing arrangement, APDC had lost a prospective purchaser.

Rejecting the idea that APDC had an acquisition fall away as a result of blocking actions made by the defendant, counsel for NextDC highlighted the security requirements of the data stored within the three datacentres in question and said a handful of clauses in the arrangement between the pair details limited rights to access for third parties as a result.

NextDC at the time agreed to allow a prospective purchaser to visit the sites on the condition the prospective purchaser agreed that it would be fronting at least AU$265 million if the sale was to proceed.

Barristers for both parties took 90 minutes to settle the dispute, which resulted in NextDC agreeing to allow one unnamed third party, highlighted as the prospective purchaser, to inspect the three sites, providing written notice is produced 24 hours ahead of the visits.

No sale was executed and the battle over access continued into September, with the ruling in favour of NextDC.

NextDC was awarded costs relating to the battle last month, and APDC said it had formally withdrawn the properties from the market and will instead be pursuing its growth strategies.

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