US private equity firm KKR has proposed to take over Vocus Group in a bid which values the Australian telecommunication operator at A$2.2 billion ($1.7 billion; €1.5 billion).
The Sydney-listed telco company said on Wednesday it received a preliminary, indicative and non-binding offer from KKR of A$3.5 per share, marking a premium to the A$2.86 closing price of the previous day but equalling only slightly more than one-third of the stock’s 52-week high of A$9.36.
Vocus’s board of directors has formed an independent board committee, chaired by David Spence, to review and assess the proposal. The company noted that “there is no certainty the indicative proposal will result in an offer for Vocus, what the terms of any offer would be or whether there will be a recommendation by the Vocus board”.
Vocus shareholders are advised not to take any action in response to the proposal while the committee is assessing the offer.
The telco company also added that the bid is subject to several conditions, including due diligence to KKR’s satisfaction, availability of financing, unanimous recommendation from Vocus’s board and entry into a definitive agreement between the parties.
The acquisition would also require shareholder and court approvals and all regulatory clearances, including from Australia’s Foreign Investment Review Board.
Vocus is one of Australia’s major internet services providers alongside Telstra Corporation, TPG Telecom, LBN, Opticomm and OPENetworks. The company, which owns a network of metro and backhaul fibre, operates in the wholesale market.
KKR declined to comment on the proposal and specific funds involved. Last week, the firm said it had raised $9.3 billion for its latest Asia-focused buyout fund. It is expected to launch its third infrastructure fund as soon as this summer, with a target of around $5 billion. Its previous $3.1 billion infrastructure vehicle is now close to be fully deployed.