Strike Three: Private Equity Suitor Walks Away From Vocus

By Glenn Dyer | More Articles by Glenn Dyer

Vocus shares dropped dramatically yesterday after the company revealed late on Tuesday evening that would be suitor, Swedish private equity group EQT, was no longer interested in making an offer.

It is the third time in less than two years that the company has proved to be unwanted after receiving tentative offers – previously it was from US private equity group, KKR, and Affinity. They were offering $2.2 billion.

The shares lost 17.7% to $3.77, reversing last week’s 26% jump when the tentative offer was first revealed.

Vocus shares were trading at $3.89 before the mooted $3.3 billion deal was announced and spent a week above $4.50 while due diligence was carried out.

EQT bailed on its plans to buy Vocus after the telco opened up its books for the potential $3.3 billion deal.

Vocus told shareholders in an Australian Stock Exchange update on Tuesday evening that EQT had chosen not to continue with its offer after an accelerated period of due diligence and discussions about a potential deal had ended.

CEO of Vocus, Kevin Russell, said in the statement “As we said in our Interim Results on 27 February, we are in the early stages of a business turnaround. We have great confidence that our strategy will deliver significant value to our shareholders in the medium to long term.

“There is growing demand for our strategically valuable network assets and we have a substantial opportunity to gain market share in Vocus Networks, which is the core of our business. We thank EQT for their interest in Vocus and the Board and management team will now be able to focus all of their attention on realising the opportunity that we have ahead of us,” the statement concluded.

Vocus restated its guidance for the 2019 financial year for underlying earnings (before interest, tax, depreciation, and amortisation) to be from $350 million to $370 million and said an investor strategy day would be held at the end of this month.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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