AGL walks away from Vocus bid
Vocus shares dive after it loses another suitor, with AGL dropping its $3bn bid for the struggling telco.
AGL Energy has walked away from a $3 billion takeover of Vocus, withdrawing a non-binding offer for the telco and ceasing due diligence on the bid.
In a statement, the utility said it was no longer confident that buying Vocus would assure value for shareholders.
Almost an hour into trade, Vocus shares were down 30 per cent to $3.02, while AGL was up two per cent to $19.94.
AGL is the second suitor to walk away from Australia’s fourth largest telco this month, after Swedish private equity firm EQT Infrastructure earlier this month withdrew a takeover proposal.
Just days after EQT dropped a higher-priced offer, AGL last week said it was revisiting its interest in Vocus and had made a tentative offer that valued the company at about $3 billion.
AGL had been offering $4.85 per share for the group, an almost 27 per cent premium to the previous closing price for Vocus’s shares but below the $5.25 a share that asset manager EQT had offered before pulling out. Vocus’s shares have been trending higher over the last year, yet remain well below a peak above $9.25 in mid-2016.
AGL chief executive Brett Redman said today the approach to Vocus reflected the view there were opportunities for AGL “as energy and data value streams continue to converge and the traditional energy sector accelerates its transformation”.
“However, we are no longer confident that an acquisition of Vocus at the proposed terms would represent sufficient certainty of creating value for AGL shareholders,” he said.
AGL had been unable to agree to due diligence terms with Vocus in May, but was granted exclusive access to conduct due diligence on Vocus for a period of four weeks after EQT’s withdrawal.
EQT’s exit came after it too had begun looking over Vocus’s books to help build the case for a firm offer.
Vocus chief executive Kevin Russell said the company’s management team would now be able to focus its attention on realising opportunities ahead.
“We have great confidence that our strategy and ability to execute our business plan will deliver significant value to our shareholders in the medium to long term,” he said in a statement to the ASX.
“There is growing demand for our strategically valuable network assets and we have a substantial opportunity for Vocus Networks to gain market share.”
Vocus said it affirmed guidance fo the financial year given in late February, for underlying earnings before interest, tax, depreciation and amortization of between $350 million and $370 million. In the prior year, earnings on that measure rose 7 per cent to $366.1 million in the 12 months through June while net profit recovered to $61 million from a prior-year loss of almost $1.5 billion.
Vocus has attracted a number of suitors in recent years but not a binding bid.
In late 2017, competing private equity firms KKR and Co and Affinity Equity Partners ended talks with Vocus after finding they couldn’t support a takeover offer on terms that were acceptable to the telecom company’s board.
Vocus has built a telecommunications infrastructure platform across Australia and New Zealand, with networks in capital and regional cities. In Australia, its fibre network extends more than 22,000km, focused on a range of corporate, small business, government and residential customers.
With Dow Jones Newswires
