In a surprising development, modular data center specialist DXN said that it has planned to sell all business assets and subsidiaries to Flow2Edge Australia for about $26 million.
The funds from the transaction will be used to pay off its debts and make a distribution to shareholders, the company said, which was reported by Market Herald. DXN Chairman John Ballie said:
“This transaction is not only a good offer, it also enables us to address the capital requirements for the business going forward. Further, it leverages the experience and footprint of FLOW Digital Infrastructure.”
DXN counts Southern Cross Cable Networks, Boeing as some of its clients. It has its Edge infrastructure solutions in Sydney, Tasmania and Darwin.
This deal is currently estimated to fall in the range of 1.1 and 1.3 cents per share, representing an 88 to 123 per cent premium on the three-month volume weighted average price. DXN told shareholders the final distribution wasn’t certain as it depends on matters such as the time between announcing the transaction and completion, the ultimate cost of the transaction as well as repaying its $4 million debt facility.
The proposed transaction is a key milestone in FLOW’s strategy to continue to invest in and expand its customer offerings across their Core and Edge infrastructure needs in Asia Pacific. Amandine Wang, CEO of FLOW, commented:
“This strategic investment is an important step for FLOW to scale up and diversify our customer offering in the region. The proposed acquisition will also allow us to accelerate our build out of a holistic digital infrastructure ecosystem in Asia Pacific.”
Kris Kumar, Chairman of FLOW, added that this is an exciting opportunity for FLOW.” The acquisition will enable us to leverage DXN’s superior Edge design and construction capabilities, allow us to control our supply chain, and deliver Edge as a service in Asia Pacific. This is a key milestone for us as we continue to strategically invest in digital infrastructure to meet the rapidly growing demand across our markets,” he said.
Further, to fund its working capital position up until the transaction, DXN will undertake a placement to raise $2.13 million. The company will issue about 250 million new shares at 0.85 cents each, representing a 70 per cent premium to its last closing price.
Pure Asset Management has committed to subscribe to two-thirds of the placement. This follows DXN’s breach of financial covenants in a previously executed facility agreement between the companies.
The transaction is subject to conditions by the Foreign Investment Review Board and DXN shareholders, which will decide at a general meeting in late September.
