Goodman and Digital Realty offer A$715m for up to 9.9% of NextDC

Goodman Group and Digital Realty offered on Wednesday to buy up to 9.9 per cent of NextDC in a deal worth about A$715 million (US$499.7 million), according to a term sheet reported by Reuters. The pair set the price at A$9.50 a share through an after-market offer, which is a 45.5 per cent premium to NextDC's Wednesday closing price of A$6.53. JPMorgan is leading the offer, the term sheet said.

According to the term sheet, the two bidders are not planning a takeover bid or a move for control of NextDC at present, but they keep the option open should circumstances change. NextDC declined to comment, and the two bidders did not immediately respond to requests sent outside Australian and US business hours.

The offer follows a sharp sell-off in NextDC stock. Shares fell 42 per cent on 21 October, when the company made its announcement. NextDC said electricity network upgrades at one of its major Melbourne projects would defer about A$140 million of contracted customer revenue this financial year. The Motley Fool reported that the distributor, Jemena, had suspended network connection works for the M3 Melbourne data centre in West Footscray, and that NextDC cut its FY27 guidance as a result. NextDC also said it would shelve all new development projects and land acquisitions for the foreseeable future, and would evaluate capital recycling, including possible sales of selected development sites.

The Motley Fool said the one-day fall wiped around $3 billion off NextDC's market capitalisation. It said the downgrade landed amid growing controversy around data centres, including Firmus Technologies abandoning its IPO plans and community backlash. The outlet also cited the Australian Financial Review as reporting that the government is set to ban data centres from being built near homes and recreational facilities. UniSuper chief investment officer John Pearce suggested in the Financial Review that the valuation should have been "closer to $1 than $11".

Reuters said NextDC shares have fallen 45 per cent so far this year, while the Motley Fool put the decline at nearly 50 per cent. The Motley Fool said most analysts still rate the stock a buy, and that UBS has a price target of $18.