Australia’s AGL Energy Ltd on Tuesday renewed its plan to buy telecoms firm Vocus Group Ltd with a fresh A$3.02 billion ($2.10 billion) approach, barely two weeks after withdrawing an earlier bid.
The all-cash offer is below a A$3.3 billion buyout proposal made by Swedish private equity firm EQT Infrastructure, which last week dropped its bid, and gives AGL four weeks to conduct due diligence on Australia’s fourth-largest internet provider.
Vocus shares jumped nearly 14 percent to $4.35, but were still well below the A$4.85 a share indicative offer price.
“EQT faced Foreign Investment Review Board hurdles,” said Micheal McCarthy, chief market strategist at CMC Markets.
“For AGL, none of those hurdles are there … however, clearly there are some doubts in the minds of investors whether or not this goes ahead.”
AGL, which is seeking growth outside its slow-and-steady electricity retailing business, said its non-binding, indicative proposal was in line with its strategy of meeting the needs of increasingly connected customers.
The company wants to bundle data and energy services, and drive efficient power use as more homes install smart meters, solar panels and batteries for energy storage.
EQT was the fourth suitor to drop a bid for Sydney-based Vocus in the last two years after approaches in 2017 when U.S. buyout firm KKR & Co Inc and Affinity Equity Partners made, then abandoned, their own plays for the then struggling telco.
AGL dropped its previous offer after it was unable to agree due diligence terms.
Facing cut-throat competition, Vocus fell into a downward spiral in 2017 and 2018, cutting and missing profit forecasts as its retail businesses battled falling profit margins and increasingly stiff competition.
But it has since shifted focus to network infrastructure, owning and developing fibre-optic cables in Australia, New Zealand and the Pacific, boosting revenue in the division by almost a third over the six months to Dec. 31.
Vocus said it has granted exclusive due diligence access to AGL for four weeks to potentially put a formal binding proposal.
“There is a clear market opportunity for Vocus, which is generating significant interest in our business and our assets,” Vocus Managing Director and Chief Executive Officer Kevin Russell said.
Source: Reuters.com