Shares in struggling telco, Vocus Group jumped more than 25% at one stage yesterday after it revealed it had opened its books to a Swedish private equity group called EQT Infrastructure after the telco received a $3.3 billion indicative offer.
In a statement to the ASX on Monday, Vocus it had received a confidential, non-binding indicative proposal at $5.25 a share, subject to due diligence. Vocus shares closed on Friday at $3.89.
The shares jumped sharply at the opening, peaking at $4.90 before easing to close up 17% at $4.558.
The proposal is also subject to financing and the full support of the Vocus board.
The failure to get where near the mooted offer price suggests that traders do not see a rival bidder out there for Vocus.
“After consideration by the board and the company’s advisers, the board decided to grant non-exclusive due diligence access to EQT to enable EQT to potentially put a formal binding proposal to Vocus.
“That process is likely to take a number of weeks,” said the ASX statement from Vocus which also mentioned it has appointed UBS and Allens as its advisers.
The board, led by former Optus CEO, Bob Mansfield, warned there is no certainty the process will lead to an offer for the telco.
The mooted $5.25 price is considerably less than the $9 the shares were trading at three years ago before the company stumbled, losing hundreds of millions, executives and board members and the confidence of the market.
As a result of those problems, especially an earnings downgrade in 2017, Vocus is on the end of a class action launched in April by Slater and Gordon (which itself has had a similar near-death experience in the UK).
Vocus said at the time that it would defend the claim.
Vocus shocked the market in May 2017 when it announced it expected its full-year profit for the year to June 30, 2017, to come in at between $160 million and $165 million – significantly lower than its earlier forecast profit of between $205 million and $215 million for the same period.
Vocus shares fell about 27% in the days following the downgrade. and has struggled to regain market credibility ever since.
Adding to the unease was a boardroom and executive upheaval after a failed attempt by founder and then director James Spenceley and Amcom chairman Tony Grist to spill the leadership of the group.
Mr. Spenceley and Mr. Grist resigned from the board after Vocus fought off the spill attempt.
