Energy company AGL decided this week to back out of a plan to offer $A4.85 a share – representing a total of US $2.1 billion – for the company.
This was just a week after Swedish private equity investor EQT backed out of its own $A5.25 a share offer, which would have valued Vocus at $3.6 billion.
According to reports, both suitors saw Vocus’s books before they decided to withdraw from conversations. Reports say “there were no black holes inside Vocus, and no ticking time bombs”, but prospective bidders thought the assets were not performing.
Vocus runs a 12,000km fibre network in Australia connecting 5,000 on-net buildings. The company put its Australia-Singapore cable into service in late 2018, and it has 23 data centres in Australia, New Zealand and the Philippines.
AGL revealed its interest in Vocus only after EQT had backed out. But it told the Australian stock exchange (ASX) yesterday: “We are no longer confident that an acquisition of Vocus at the proposed terms would represent sufficient certainty of creating value for AGL shareholders.”
After AGL’s announcement, Vocus’s shares dropped 25%.
Vocus CEO Kevin Russell, who joined only last year with the mandate to rebuild the company, said it would focus on growing market share. “We have great confidence that our strategy and ability to execute our business plan will deliver significant value to our shareholders in the medium to long-term.”
In February, at the end of his first half-year as CEO, Russell said: “I have great confidence in the strategic growth opportunity for our company, with the core of that opportunity being in our Australian infrastructure business, Vocus Networks. This is a three-year turnaround and our board and leadership team is very clear on the way forward.”
AGL’s CEO, Brett Redman, said the energy company – originally Australian Gas Light – is still interested in telecoms: “AGL is exploring investment opportunities across three focus areas: optimising our existing portfolio for performance and value, evolving and expanding our core energy markets offerings, and creating new opportunities with connected customers.”
He added: “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.”
