AGL makes new Vocus buyout offer

An acquisition of Vocus by Australian energy company AGL is back on the table. Vocus revealed this morning that it had agreed to due diligence terms with AGL.

The utility has been granted exclusive access to conduct due diligence on Vocus, on the back of a non-binding indicative proposal to acquire the telco for A$4.85 per share.

The $3.02 billion offer for Vocus falls short of the indicative $3.27 billion offer by private equity firm EQT Infrastructure detailed by the telco in late May. Vocus announced last week that, following due diligence, EQT would not proceed with an acquisition.

Vocus in mid-2017 granted due diligence to private equity firms KKR and Affinity but in August of that year Vocus said discussions had ended without a deal.

AGL in late May 2018 confirmed it had been considering buying Vocus but withdrawn its indicative offer after the parties were unable to agree on due diligence terms.

“After last week's announcement that discussions with EQT Infrastructure had ceased, AGL returned with a non-binding and indicative proposal to acquire Vocus for $4.85 per share,” said Vocus CEO Kevin Russell.

“There is a clear market opportunity for Vocus, which is generating significant interest in our business and our assets.”

“We are focused on executing our turnaround strategy and delivering the opportunity in front of us,” the Vocus CEO said. “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.”

Vocus said conditions of the indicative proposal include completion of a four week period of exclusive due diligence to AGL’s satisfaction; unanimous recommendation from the Vocus board; and entry into a mutually acceptable scheme implementation agreement.

In a statement released to the ASX, AGL said that a potential buyout of Vocus is aligned with the utility’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.”

The acquisition could deliver customer loyalty and operating costs benefits, AGL said, and allow multi-product energy and broadband deals. There is also an opportunity to “accelerate untapped growth potential in Vocus’ high quality broadband fibre infrastructure network and generate further incremental value from these assets as a result of a combination with AGL”.

Vocus’ data centre business is also attractive to AGL, and the energy company could also use the telco’s enterprise platform to offer integrated data and energy services to large volume customers.

Vocus' consumer and SMB arms have been struggling, but its enterprise and government business has enjoyed significant revenue growth.