Australian telco, Vocus Group (ASX:VOC), has found itself at the centre of a bidding war after the company received an acquisition proposal from Asian private equity firm, Affinity Equity Partners.
In June, Kohlberg Kravis Roberts & Co (KKR) has revealed plans to acquire Vocus Group, with the US-based private equity firm tabling a $2.1 billion buyout proposal.
Revealed via a statement to the ASX, terms of the proposal would see KKR acquire 100 per cent of shares in the telco giant, at a price of $3.50 per share.
By early July, Vocus decided the offer was serious enough for it to open its books to private equity firm, after granting the United States-based company non-exclusive due diligence rights.
Now, the Vocus board has revealed that, following the close of trade on 10 July, it received a preliminary, indicative and non-binding proposal from Affinity Equity Partners and its affiliates to acquire all of the shares in the Company at a price of $3.50 cash per share, via a scheme of arrangement – matching the prior offer from KKR.
The company told shareholders on 11 July that the new proposal is subject to due diligence and conditional on a number of other matters substantially similar to those in the KKR Proposal.
“As such, the board of Vocus has concluded that, subject to negotiation of an appropriate confidentiality agreement, it is in the best interests of shareholders to also grant Affinity the opportunity to conduct due diligence on a non-exclusive basis in order to establish whether an acceptable binding transaction could be agreed,” Vocus said in a statement.
Vocus reiterated that there is no certainty that the process will result in an acceptable offer for the company, nor what the terms of any such offer would be, or whether there would be a recommendation either way by the Vocus board.
The new proposal comes less than half a year after Vocus sold off its multimillion-dollar stake in Macquarie Telecom (ASX:MAQ), via a block trade to a “broad range of new institutional and retail shareholders”.
Regardless of shedding its stake in the fellow telco, the potential buyers clearly see some value in the company. Certainly, the company’s financials appear to be fairly healthy.
In May, Vocus offered shareholders revised guidance figures for the full financial year ending 2017. While flagging a slight drop in projections, the company told shareholders it expects to see revenues of around $1.8 billion.
At the same time, the company flagged a more substantial revision of its underlying pre-tax earnings (EBITDA) forecasts, with the company now expecting between $365 million and $375 million, instead of the previously estimated $430 million to $450 million.
In February, however, ARN reported that Vocus Group recorded "thriving half yearly figures", with a revenue up 403 per cent and more than doubling its profit to $47 million for the six months ending 31 December 2016.
At the time of publication, Vocus' shares were trading at $3.45.