Fourth time lucky for Vocus?
The telco, Vocus will open its books exclusively to AGL Energy, less than a week after a Swedish private equity group, EQT withdrew its non-binding approach after doing due diligence.
EQT had offered a suggested price of $5.25, AGL is suggesting a cheaper price of $4.85 and Vocus shareholders will be the losers.
The $4.85 a share cash offer means the telco will enter into the due diligence process for the fourth time in two years. Two earlier bids were withdrawn before EQT bailed late last week.
AGL confirmed last week that it had previously approached Vocus but had been unable to reach an agreement.
Now, following EQT’s departure, it seems AGLis more attractive to Vocus.
Vocus shares rose 8% to $4.17 but were up more than that at one stage at $4.36.
Vocus managing director and chief executive Kevin Russell said in a statement on Tuesday that AGL returned with a proposal to buy the business after Swedish private equity firm EQT ditched a $3.3 billion bid during due diligence. AGL and Vocus were previously unable to agree to due diligence terms.
“There is a clear market opportunity for Vocus, which is generating significant interest in our business and our assets,” Mr. Russell said in a statement.
“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.”
The proposal is subject to a four-week period of exclusive due diligence and a unanimous recommendation from Vocus’ board as well as regulatory, court and shareholder approvals should the takeover go ahead.
In its statement on Tuesday AGL talked the usual business speak about customers, saying in part.
“AGL’s interest in Vocus is consistent with AGL’s strategy to meet the needs of increasingly connected customers as energy and data value streams converge and the traditional energy sector transforms – and aligned with AGL’s capabilities in integrating and managing complex assets and customer portfolios.
“AGL believes acquiring Vocus may be an optimal way of executing this strategy, creating material shareholder value and driving customer loyalty while providing access to a market-leading integrated broadband fiber asset base and creating considerable additional options for long-term growth.”
The Vocus approach on Tuesday will focus attention away from the surprise news from AGL that a generator outage at its Loy Yang power station in Victoria could cost it at least $100 million in lower profits in 2019-20.
News of the problem and the high cost was announced by AGL in a statement at 6.44pm on Friday.
AGL shares fell 7.2% to $19.40 yesterday – how much of that was a thumbs down for the Vocus bid and how much for the Loy Yang surprise or both?