The company will be acquired quite sooner - looks a perfect fit for ST Telemedia / Temasek and potentially Keppel, Brookfield or Digital Realty Trust.
Looking at all the work that ST Telemedia has done accelerating the growth of GDS Holdings (NASDAQ : GDS) and Virtus Data Centers, buying a smaller regional player like NextDC would make sense from a diversification standpoint. NextDC owns just a handful of data centers only in Australia and lacks financial and management resources to compete in this tougher market.
Just imagine Digital Realty Trust or CyrusOne start expanding in Australia to compete with Equinix - the customer intake from tiny players like NextDC will be high because of the higher specification / quality properties designed by DLR / CONE.
The scenario of selling the company will be beneficial for both NextDC and its shareholders that want it to achieve its long-term growth objectives.
Despite the high valuation of NextDC (trades at a premium to GDS, even though GDS has double/triple the growth rate of NextDC), one should speculatively stick with NXT ahead of corporate activity. Every drop in NXT shares is a chance to load up.
NXT Price at posting:
$6.05 Sentiment: Buy Disclosure: Held
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