Australia’s Vocus ends takeover talks with KKR, Affinity

The telecom operator’s share price plunges after it fails to reach an agreement ‘acceptable to the board’.

Australian telecom operator Vocus Group has terminated discussions with two potential buyers that submitted takeover proposals separately, but equally valued the company at A$2.2 billion ($1.74 billion; €1.48 billion). 

US buyout firm KKR and Hong Kong-based Affinity Equity Partners considered takeover bids in June and July respectively for acquiring all the shares of the Sydney-listed telecom operator at A$3.5 per share. The price is only slightly more than one-third of the stock’s 52-week high of about A$9.

Last month, Vocus’s board granted both bidders the right to conduct due diligence on a non-exclusive basis to see if a binding transaction could be secured. 

“Throughout the due diligence process, the bidders indicated support for management’s strategic plans and transformation programme. However, the bidders have now advised that they are unable to support a transaction on terms acceptable to the board,” said Vocus. “Accordingly all discussions have now ceased.” 

Vocus’s share price plunged 16 percent yesterday from A$3.21 to A$2.7 per share.   

The company added that an important factor in the decision to end the sale process is its 2018 outlook, which has a forecast revenue growth of between A$1.9 billion to A$2 billion and underlying EBITDA growth of between A$370 million and A$390 million. Despite competitive market conditions, the company is confident it will be able to return to sustainable organic growth. 

Vocus owns and operates internet networks in Australia and New Zealand, with a portfolio of brands catering to corporate, government and residential clients.