Subscribe
Embattled data centre firm NextDC’s shares soar after share raid
Embattled AI data centre firm NextDC has seen its share price rocket by more than 40 per cent after a share raid by developers.
- AI data centre firm NextDC has seen its share price skyrocket after a surprise share raid.
- The Goodman Group and New York-listed Digital Realty snapped up a 9.9 per cent stake in NextDC, sending its share price higher.
- The pair have said no takeover offer is currently underway, but they did not rule it out.
Embattled AI data centre firm NextDC has seen its share price rocket by more than 40 per cent after a share raid by the Goodman Group and New York-listed Digital Realty.
A share raid is when a rival business or investor aggressively and quickly buys a large stake of shares, often soon after the market opens, to gain leverage.
Often, but not always, a share raid precedes a takeover bid.
By midday, NextDC’s had gone from $9.07 before open to $9.44, a jump of more than 44 per cent.
In a note to investors, issued via their broker, the Goodman Group and Digital Realty said they have “no intention of submitting a control proposal or making a takeover bid for the Company at this time, but reserve their right to do so.”
It’s believed the pair snapped up a 9.9 per cent stake in NextDC during the raid, but the total stake is yet to be revealed.
In response, NextDC told shareholders that it was unaware the share raid was coming.
“The Board considers this an opportunistic move by Goodman and Digital Realty,” it said.
“The Board is not in possession of any takeover proposal at this time.
“Any bona fide approaches will be considered by the Board on their merits and in the best interests of all NEXTDC shareholders.
“At this time, NEXTDC shareholders do not need to take any action in relation to this announcement.”
The raid comes at a particular low point for NextDC.
In late October, the company saw its share price plunge to an eight-year low after the Brisbane-based company announced it was revising down its forecasts due to community backlash around a data centre build in Melbourne.
Six days later, NextDC’s chair Douglas Flynn announced he would depart the company, and its CEO Craig Scroggie would forgo all of his bonuses for the financial year.
Why NextDC might be a ‘soft target’ for aggressive takeover
Investors were spooked after NextDC advised it was forecasting a 36 per cent downgrade to its near-term earnings, thanks to community backlash over its M3 project.
M3 is the name of NextDC’s data centre in West Footscray in Melbourne.
To expand the data centre, NextDC needed more power, which required it to erect 22-metre-high concrete poles that would carry more power to the centre.
Residents were furious, reportedly physically blocking work at the site, and Jemena, the installer of the new electrical work, eventually said it was suspending construction until early next year.
The delay in power for the M3 project severely hit NextDC’s earnings forecast, which investors were relying on to continue supporting the company’s shares.
NextDC has been contacted for comment.
Topics: AI, Sharemarket, Shares