AGL Energy Drops Takeover Bid for Vocus -- Update
June 16 2019 - 10:03PM
Dow Jones News
By Robb M. Stewart
MELBOURNE, Australia--Struggling telecommunications provider
Vocus Group Ltd. (VOC.AU) has lost another suitor after AGL Energy
Ltd. (AGL.AU) said it had withdrawn a nonbinding takeover offer and
ceased due-diligence work on a bid.
In a statement Monday, the utility said it was no longer
confident an acquisition of Vocus on the terms it had proposed had
sufficient certainty of creating value for shareholders. The
decision comes less than a week after Vocus agreed to open its
books to AGL and about two weeks after Sweden's EQT dropped a
higher-priced offer for Vocus after it too conducted due
diligence.
In response, Vocus said it would update investors on its
strategy early next month and said it had confidence its ability to
execute its business plan amid a proposed three-year
turnaround.
Just last week, AGL said it was revisiting its interest in Vocus
and had made a tentative offer that valued the company at about 3
billion Australian dollars (US$2.1 billion). EQT's exit came after
it too had begun looking over Vocus's books to help build the case
for a firm offer.
Vocus has attracted a number of suitors in recent years but not
a binding bid. In late 2017, competing private equity firms KKR
& 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.
AGL had been willing to offer A$4.85 a share, an almost 27%
premium to the previous closing price for Vocus's shares but below
the A$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 A$9.25 in mid-2016.
Vocus has built a telecommunications infrastructure platform
across Australia and New Zealand, with networks in capital and
regional cities. In Australia, its fiber network extends more than
14,000 miles, focused on a range of corporate, small business,
government and residential customers.
AGL Managing Director and Chief Executive Brett Redman said AGL
was exploring investment opportunities that focused on building its
existing portfolio of electricity generation and retailing assets,
that expanded its core energy-markets offerings, and which created
new opportunities with connected customers.
"We believe there will be material opportunities for AGL as
energy and data value streams continue to converge and the
traditional energy sector accelerates its transformation," he
said.
A number of industry analysts had questioned jumping into a new
business area with a bid for Vocus and warned it would increase
risk for investors.
Vocus Chief Executive Kevin Russell said there is growing demand
for the company's network assets and there was a substantial
opportunity to gain market share for the core Vocus Networks
unit.
The telecoms company said it affirmed guidance fo the financial
year given in late February, for underlying earnings before
interest, tax, depreciation and amortization of between A$350
million and A$370 million. In the prior year, earnings on that
measure rose 7% to A$366.1 million in the 12 months through June
while net profit recovered to A$61 million from a prior-year loss
of almost A$1.5 billion.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
June 16, 2019 21:48 ET (01:48 GMT)
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