Monday, 17 June 2019 11:52

AGL Energy pulls out of bid for Vocus Communications Featured

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AGL Energy pulls out of bid for Vocus Communications Pixabay

Australia's fourth largest telecommunications operator Vocus Communications has lost another suitor, with AGL Energy announcing on Monday that it had withdrawn its non-binding, indicative proposal to acquire the firm.

The offer was made on 11 June and was for all the shares in the company at $4.85 a share, meaning that the total bid would come to a shade over $3 billion.

AGL managing director and chief executive Brett Redman said in a statement to the ASX on Monday: “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.

“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.

"The approach to Vocus reflected our view that the Vocus asset base has attributes that could support the execution of this strategy and benefit our customers.

“However, we are no longer confident that an acquisition of Vocus at the proposed terms would represent sufficient certainty of creating value for AGL shareholders. We would like to thank the Vocus board and management team for their assistance over recent weeks.”

Vocus chief executive Kevin Russell commented: “As we have repeatedly said, this is a three-year turnaround. 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.

"There is growing demand for our strategically valuable network assets and we have a substantial opportunity for Vocus Networks to gain market share. This is the core of our business. The Vocus management team will now be able to focus all of their attention on realising the opportunity that we have ahead of us.”

AGL had made a bid to buy Vocus last month, but backed out on 31 May when the terms of due diligence could not be agreed.

Prior to that, Swedish equity firm EQT Infrastructure pulled out of a bid for Vocus that valued the company at $3.3 billion or $5.25 a share.

In June 2017 a report said TPG Capital could team up with Vocus founder James Spenceley to examine a takeover in the event that the equity firm's bid for Fairfax Media did not come off.

The same month, American equity firm Kohlberg Kravis Roberts made a bid to buy Vocus for A$2.2 billion.

Vocus has been hit by the ever-decreasing margins of its broadband business as the NBN Co has made it difficult for RSPs to turn a profit. Its retail business was written down by about $1 billion in 2017.

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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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