AGL granted exclusive due diligence after lobbing $3bn bid for Vocus

Vocus has opened its books to AGL after the utility launched a fresh $3bn bid for the telco.

Vocus Group CEO Kevin Russell. Hollie Adams/The Australian

Australia’s top power producer AGL Energy is having another tilt at Vocus Group, lobbing a $3 billion bid for the telco

The $4.85-a-share, nonbinding and indicative offer from AGL comes after Swedish private equity player EQT halted its pursuit of the telco last week, after a quick fire dive into Vocus’s books.

EQT, which had put a $5.25 a share offer for Vocus, retreated after it tried to lower the initial price. The private equity firm wanted to revise its offer down to around $5 per share after the due diligence process.

AGL told the market in May that it had previously been unable to agree due diligence terms with Vocus. The utility had pitched its earlier offer at around $4.80 per share for Vocus (VOC)

However, as pointed out by The Australian’s DataRoom, there were indications that the utility was likely to have another tilt at the telco.

“After consideration by the Board and the Company’s advisers, the Board has decided to grant exclusive due diligence access to AGL for a period of four weeks to enable AGL to potentially put a formal binding proposal to Vocus,” Vocus said in a statement on Tuesday.

Vocus managing director and CEO Kevin Russell reiterated that the telco’s business remained attractive to the market, having highlighted the inherent value of its assets last week.

“There is a clear market opportunity for Vocus, which is generating significant interest in our business and our assets, he said in a statement on Tuesday.

“We are focused on executing our turnaround strategy and delivering the opportunity in front of us.”

“However, we have been clear that the Board will always act in the best interests of our shareholders to engage with credible parties that bring forward proposals that are worthy of further consideration.”

Vocus posted a 29 per cent drop in underlying net profit after tax of $48.8m for the first half of fiscal 2019. Revenue for the period was flat at $974.2m, with revenue at Vocus’s consumer and SMB units sliding 12 per cent and 27 per cent respectively.

At 12.48pm (AEST), shares in Vocus were up 31 cents, or 8 per cent, at $4.14 while AGL shares had dropped $1.39, or 6.65 per cent, to $19.25.