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AFR: Eight reasons why NEXTDC is a takeover target

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rowanparker

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20/01/16

12:31

Post #: 16831886
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Deutsche came up with eight reasons by NEXTDC is a "highly attractive" takeover target.
1. The significant upfront costs associated with building DC's.
2. The time taken to build scale (NXT listed 5 years ago and remains loss making).
3. The network effects which make it more difficult to enter into new jurisdictions where there are established incumbents.
4. A back-ended returns profile.
5. Site availability is limited given various requirements.
6. Larger players would arguably have material cost of capital advantages. NXT's current funding costs are ~8.5%. This is particularly important for a capital intensive business such as NXT's.
7. Currency movements (AUD/USD has declined 18% in past 12 months).
8. The industry is becoming more mature and the threat from CSP's is likely to grow increasing the importance of scale. It also has a history of consolidation.
The analysts said similar deals had been done at an average 13.6-times earnings, on an enterprise value-to-EBITDA basis.

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Read more: http://www.copyright link/street-talk/eight-reasons-why-nextdc-is-a-takeover-target-20160119-gm9loq

NXT Price at posting: $2.48 Sentiment: Hold Disclosure: Held
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Last $16.23		Change 0.030(0.19%)		Mkt cap ! $9.340B

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