Digital Realty and Goodman Offer AU$715m for 9.9% of NextDC

Digital Realty and Goodman Group have put AU$715 million (US$499.7m) on the table for a 9.9 percent stake in NextDC, the Australian data center operator whose share price has dropped by as much as 45 percent in recent weeks.

The offer, at AU$9.50 (US$6.65) per share, represents a 45.5 percent premium to NextDC's valuation when trading ceased on Wednesday. The two bidders revealed the move via a term sheet submitted to the Australian Stock Exchange after the close, as reported by Reuters and others. JP Morgan is leading the offer.

What does the offer actually commit to?

Not a takeover. According to the term sheet, the companies will not make a full takeover bid and won't seek a controlling stake — though the document leaves room for that to change in the future. So practitioners should read this as a strategic foothold, not an acquisition play. A 9.9 percent position keeps the pair just under the 10 percent threshold that typically triggers fuller disclosure obligations in Australia.

Why is NextDC trading at a discount?

The share slide traces back to October, when NextDC revealed it had to defer AU$140 million (US$97.9m) of customer revenue. The culprit: delays to electricity network upgrade work at its M3 facility in West Footscray, Melbourne.

The specifics matter for anyone tracking grid constraints as a growth bottleneck:

• The expansion required high electricity poles to carry more power to the site, but installation has slipped to the 2027/28 financial year after community protests.
• Local councilors haven't approved the upgrade, which would double pole heights from 11 to 22 meters (72 feet).
• Electricity provider Jemena is investigating safety concerns raised about the project.

NextDC opened M3 in 2022. Once expanded, site capacity was set to grow from 60MW to 225MW — nearly a fourfold increase that's now stuck behind a permitting fight.

After the delay surfaced, the company said it would pause new development projects and land acquisitions across its entire portfolio for the foreseeable future. For a firm with 20 data centers in operation or development across Australia, that's a significant brake on the growth story investors had priced in.

How solid is the balance sheet behind the bid?

NextDC isn't starved of capital. It raised AU$500 million (US$347m) in debt financing in July, giving it runway while the M3 impasse plays out. Beyond Australia, the operator has sites in planning or under evaluation in Japan, Thailand, Malaysia, and Singapore.

Goodman Group, based in Australia, develops data centers and commercial property. Digital Realty, its US partner on the bid, is one of the largest data center operators globally. DCD has contacted NextDC, Goodman Group, and Digital Realty for comment.

What's the read for the market?

A 45.5 percent premium from two of the sector's biggest names tells you how they value NextDC's portfolio once the Melbourne power dispute resolves — whenever that is. The bid prices in the grid delay as temporary rather than structural. Watch whether councilors approve the pole upgrade and how Jemena's safety review lands; both will move NextDC's capacity timeline and, with it, the calculus behind any future move from the bidders.