GMG +7.03%/NXT +50%: and US-listed data center player Digital Realty have moved to build a significant stake in NextDC (ASX: NXT) +50.84% following its recent guidance downgrade and challenges at its M3 Melbourne data center.
Key details:
- The bookbuild targeted up to 9.9% of NextDC at $9.50 per share, a 45.5% premium to its previous close.
- The bookbuild has been conducted, but the final stake acquired remains unconfirmed.
- Goodman and Digital Realty say they have no current intention to make a takeover bid or control proposal, but reserve the right to do so.
- NextDC has appointed financial and legal advisers and says shareholders do not need to take any action.
NextDC’s recent issues raise questions around management execution, complex debt funding arrangements and development challenges. We see Goodman as the superior operator, with a stronger balance sheet, longer track record and more prudent management team. Goodman could potentially step in to clear the decks, address these issues and bring greater discipline to
NextDC’s data center development. We remain long GMG in our Active Growth Portfolio and see this as an attractive strategic opportunity for the business.
MM remains long and bullish GMG
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