Data centre company DXN fully drops acquisition talks with Singapore's FLOW Digital Infrastructure

ASX-listed data centre company DXN Limited has announced it will no longer sell its EDGE module manufacturing business to the local subsidiary of Singapore-based FLOW Digital Infrastructure.

This development marks the end of negotiations between DXN and Flow2Edge Australia Pty Ltd, which first started as an August announcement of a $26 million takeover of the whole company. The deal was later changed in mid-October to include only the EDGE business.

In the ASX announcement, DXN said FLOW would not be able to satisfy the conditions in the proposed sale agreement and that the sale cannot proceed in its current form and was terminated.

“The board of DXN intends to consider alternative strategic options for its EDGE module manufacturing business, potentially including an alternative opportunity to partner with FLOW,” the announcement read.

“This opportunity may take the form of a licence and distribution arrangement with FLOW, details of which the board of DXN is considering. These discussions are early stage and there is no certainty that they will result in a definitive agreement.”

In a statement sent to CRN, DXN chief executive Shalini Lagrutta said, "While the DXN team are disappointed that the Flow sale could not be consummated due to a condition precedent not being met as a result of circumstances beyond our control, Flow Digital has reiterated to us that it remains committed to forming a relationship with DXN for its international market expansion."

"This is evidenced by current negotiations on a new commercial agreement which would involve recurring revenue for DXN’s modular data centres for international markets that Flow are focused on, leveraging DXN’s core expertise and customer relationships which we have amassed over the years."

DXN added it has also received inquiries about the potential sale of its data centre business, and the company has started negotiations with the interested parties.

“These negotiations are also at an early stage and there is no certainty that negotiations will result in any definitive arrangements,” the announcement added.

“The company will continue to keep shareholders and the market informed of material developments, including providing details of any binding transactions that may result from the above, in accordance with its continuous disclosure obligations.”

In August, DXN first announced a deal with Flow2Edge which would see Flow2Edge wholly acquire the DXN business assets and subsidiaries TAS01 Pty Ltd, Secure Data Centre Pty Ltd and the SDC Unit Trust for $26 million.

The deal was revised in September to only include the EDGE module manufacturing business for $20 million, while DXN would continue exploring options for its data centre businesses at the time. A shareholder vote was slated for late November and was expected to complete by the end of the year.

Flow2Edge parent FLOW Digital Infrastructure, owned by Singapore-based PAG Real Estate, is a managed platform founded to develop a leading digital infrastructure platform across the Asia Pacific region. The company invests in and operates physical assets that constitute the digital infrastructure ecosystem, including cloud, hyperscale, edge and enterprise data centres as well as network and fibre assets.