AGL swiftly backs away from possible Vocus acquisition

Energy company ends due diligence

Less than a week into a four-week period of exclusive due diligence AGL says that it will not proceed with a potential acquisition of Vocus.

AGL early last week said that it had made an indicative, non-binding offer of $3.02 billion for the telco group, after an earlier tentative offer was withdrawn when the two companies failed to agree on due diligence terms.

“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,” said AGL’s chief executive, Brett Redman, in a statement.

“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,” the CEO said.

“We would like to thank the Vocus board and management team for their assistance over recent weeks.”

AGL is the latest in a string of potential purchasers that have explored a buyout of the troubled telco but then backed away following a due diligence process.

In June, private equity firm EQT Infrastructure withdrew a $3.27 billion indicative offer for Vocus. In 2017, KKR and Affinity Equity Partners expressed interested in buying the company but in August of that year Vocus’ board said that neither could come up with an acceptable deal.

While Vocus’ enterprise, wholesale and government wing has enjoyed significant growth, its SMB and consumer businesses have struggled. The telco is also fighting off a class action over alleged breaches of its continuous disclosure obligations

“As we have repeatedly said, this is a three year turnaround,” Vocus CEO Kevin Russell said in a statement issued by the company after AGL's announcement.

“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,” the CEO said.

“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.”

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