AGL Energy Drops Takeover Bid for Vocus

   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 (AGL.AU) said it had withdrawn a nonbinding takeover offer and ceased due-diligence work on a bid.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.

Just days after Sweden's EQT dropped a higher-priced offer, AGL last week 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.

Write to Robb M. Stewart at [e-mail]

(END) Dow Jones Newswires

June 16, 2019 20:09 ET (00:09 GMT)

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