Australian data centre operator NEXTDC’s CEO Craig Scroggie said he would be “mortified” if forced to sell assets, amid a 9.9% stake acquisition by rivals Goodman Group and Digital Realty.

Speaking at a UBS conference in Sydney on Monday (9 November), Scroggie said management had been directed by the board to focus on resolving the immediate challenges at its Melbourne M3 data centre project before pursuing additional growth opportunities.

“The opportunities that are not contracted are no longer our number one priority,” he said.

While NEXTDC has considered measures including reducing non-essential capital expenditure and potentially recycling assets, Scroggie’s remarks suggested that the company remains reluctant to dispose of development sites with significant long-term potential.

“I would be mortified if we had to sell any of the assets that we have spent years working hard to acquire,” he said, describing the sites as capable of supporting future gigawatt-scale developments and significant long-term shareholder value.

The comments come as Australian property group Goodman Group and US data centre operator Digital Realty acquired a combined stake following a sharp decline in its share price after the Melbourne project setback and a subsequent earnings downgrade.

As of Friday (6 November), there had been no engagement between NEXTDC and Goodman and Digital Realty, according to a source familiar with the situation. 

The two investors said in a market update on Monday that they “look forward to a potential collaboration with the NEXTDC board and management on the ways and forms in which the parties may help to address the challenges facing the company.”

Scroggie acknowledged the industry interest in NEXTDC, saying it was unsurprising that the company had attracted attention given the business it had built over the past 15 years.

“There has been a lot of people over many, many years that have always, I think, had a degree of respect for what we’ve been able to build in a world-class colocation business.”

A source familiar with NEXTDC said acquiring a stake in the company could serve as a defensive move by Goodman and Digital Realty to deter other potential bidders.

The source added that hostile takeovers are not uncommon in Australia, while NEXTDC’s sharp share price decline could create trading opportunities for other investors.

NEXTDC’s shares rose 5.23% to AUD 11.07 in early trading on Tuesday (10 November), valuing the company at approximately AUD 8bn (USD 5.53bn).

The company raised USD 790m through a convertible bond arranged by UBS in September. The bond slumped to 72.17 in the secondary in October following the project delay and is last spotted around 87.3.

Goodman declined to comment beyond the latest statement made on 9 November.