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Vocus gets $2.2b takeover offer from KKR

Vocus gets $2.2b takeover offer from KKR Featured

Australia's fourth biggest telecommunications company Vocus has received a $2.2 billion takeover offer from private US equity firm Kohlberg Kravis Roberts.

The company said on Wednesday it had received a non-binding indicative offer to buy all its shares at $3.50 in cash, a 22% hike on Tuesday's close.

Vocus said it would consider the proposal and requested its shareholders not to take any action. One condition of the offer is that it should have unanimous support from the board.

The offer is also based on the following conditions:

  • No dividends paid or capital returns must be undertaken before implementation of the scheme;
  • Any options or performance rights would be acquired or cancelled;
  • Vocus will not have less than a normalised level of working capital at completion;
  • Net debt for 30 June 2017 will not be greater than $1.1 billion;
  • EBITDA for the 12 months ending 30 June 2017 should be in-line with guidance of $365 million to $375 million and is not driven by any material one-time or abnormal items; and
  • Vocus’ existing asset base is maintained and there are no material divestments.

The company said it had formed an independent board committee to assess the offer. David Spence, chairman of the company, and Jon Brett, Craig Farrow, Robert Mansfield, and Rhoda Phillippo, the other non-executive directors, make up this panel.

Vocus said it had appointed Credit Suisse and Goldman Sachs as its financial advisers and Allens as its legal adviser.

The company has been in the news over the last eight months, with most of it being negative. In October last year, a plot to oust chief executive Geoff Horth led to the departure of founder and chief executive James Spenceley and fellow board member Tony Grist. Vocus shares slumped to a 13-month low after the incident.

Another big fall, by more than a quarter, occurred in November and saw $874 million wiped off its value after it shared its first guidance to expected earnings along with its new acquisitions, NextGen Networks, M2 Group and Amcom.

In May, Vocus issued its second profit warning in six months, leading to another big fall in share prices, this time by 30%.

A day after this, there were reports that Vocus was looking at selling off its data centres.

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Sam Varghese

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A professional journalist with decades of experience, Sam for nine years used DOS and then Windows, which led him to start experimenting with GNU/Linux in 1998. Since then he has written widely about the use of both free and open source software, and the people behind the code. His personal blog is titled Irregular Expression.

 

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