TPG Telecom, Macquarie ‘committed to deal’

TPG’s enterprise, government and wholesale assets and associated fixed infrastructure assets are under consideration.

Following TPG Telecom’s update to the market last week on negotiations with Macquarie Group over a $6.3bn asset sale, talk is that both parties continue to be highly committed to getting a transaction over the line.

Some have even suggested the deal is all but done.

The company told the market on October 4 the exclusive due diligence period granted to the Macquarie-owned Vocus Group in relation to its proposed acquisition of a selection of TPG’s enterprise, government and wholesale assets and associated fixed infrastructure assets, including Vision Network, had now expired.

But TPG added discussions in relation to the commercial terms remained ongoing, and the consideration of $6.3bn and the highly provisional indicative earnings before interest, tax, depreciation and amortisation perimeter of about $550m are subject to change.

The statement noted the deal was complex and needed time to be worked through.

In recent corporate transactions where an exclusive due diligence has expired without a deal being struck, it has meant one thing – if a sale is going ahead, it’s happening at a lower price. But in this case, market experts believe Vocus owning the TPG assets it plans to sell makes complete sense.

TPG chief financial officer Grant Dempsey is understood to have agreed to hang around until the sale is finalised after earlier announcing his departure.

There was some thought that perhaps another suitor could be looking at the assets, but industry experts say they believe the negotiations with Macquarie are too far progressed. A note published by Ord Minnett after a deal was announced pointed out that a challenging factor for negotiations is that Macquarie needs debt financing in a volatile credit market.