NextDC Shares Surge 43% as Goodman and Digital Realty Move to Buy Up to 9.9% Stake

NextDC said in a regulatory filing that a trust controlled equally by Goodman, the Australian industrial property group, and Digital Realty, the US-listed data centre landlord, ran an aftermarket bookbuild on Wednesday seeking shares at A$9.50 each. The price is a 45.5 per cent premium to NextDC's Wednesday close of A$6.53 and values the full stake at about A$715 million, according to Data Center Dynamics and Finimize. Finimize said JPMorgan arranged the term sheet. Bloomberg said the shares had their biggest one-day rise since 2010.

The bid lands at a weak moment for NextDC, and that timing is why its board described the move as "opportunistic". It came two weeks after the company disclosed a power supply delay at its M3 Melbourne campus and cut its outlook for the 2027 financial year. NextDC said it did not know the outcome of the share purchase. Goodman and Digital Realty told investors they have no current intention of making a takeover bid but reserved the right to do so, according to CNBC.

The M3 Problem

In its October update, NextDC said network upgrade works by the distributor Jemena that supply power to M3 had been delayed, pushing the next step-up in grid supply into the 2028 financial year. The company cut its fiscal 2027 net revenue guidance to A$475 million to A$500 million, from A$615 million to A$640 million, and its underlying EBITDA forecast to A$245 million to A$265 million, from A$385 million to A$410 million, according to reports of the announcement. About A$140 million of contracted revenue was pushed out of the year. NextDC also lowered its capital spending plan to A$4.5 billion to A$5.0 billion and paused new development projects and land purchases while it explores selling selected sites.

The shares fell as much as 44 per cent after that update, from A$9.18 before a trading halt. The A$9.50 offer is above that pre-halt price, so the buyers are paying more than the market valued NextDC before the power delay was disclosed.

A Different Read on Data Centre Risk

The Australian rally ran against the mood in US markets. CoreWeave fell about 9 per cent on Wednesday and Iren dropped about 11.2 per cent, according to CNBC, after Democratic gains in the midterm elections raised expectations of tighter scrutiny of data centre construction. Goodman and Digital Realty, which already develop and run data centres, are in effect betting that powered capacity in Australia's largest cities will be worth more as grid connections get harder to secure.

A holding of up to 9.9 per cent stays just below the 10 per cent level at which a shareholder can block a compulsory acquisition under Australian takeover rules, while giving the two companies a large position if they decide to pursue NextDC later.

The next test for M3 is political. The Victorian government's planning decision on stages six and seven of the campus is now not expected until after the state election on November 28, according to reports of the October update.