Second private equity firm circles Vocus

Affinity Equity partners lodges preliminary, indicative bid for telco

Vocus is the subject of a second acquisition bid, with the telco revealing this morning that Asian private equity firm Affinity Equity Partners had lodged a preliminary takeover offer.

Affinity has made an indicative and non-binding proposal of $3.50 cash per Vocus share.

In June, Vocus revealed that it had received an indicative takeover bid from US-headquartered private equity firm Kohlberg Kravis Roberts & Co. L.P. Like Affinity, KKR has offered $3.50 cash per share.

Earlier this month Vocus’ board granted KKR the opportunity to conduct due diligence. In a statement, the board said that the same opportunity would be granted to Affinity.

“The Board of Vocus now considers that the interests of shareholders will be best served by a formal process to thoroughly evaluate whether a change of control offer, at a price and on terms that the Board would recommend, can be secured,” the statement said.

“In order to ensure that the process operates as effectively as possible, the Board does not intend to make any further announcements unless and until a recommended offer is secured, or unless there is a development which it considers requires disclosure.”

The board reiterated that there was no certainty the process “will result in an acceptable offer for Vocus, nor what the terms of any such offer would be, or whether there would be a recommendation by the Vocus Board.”

Vocus is currently trading at $3.45 a share, down from $9 at the start of August last year.

Vocus is Australia’s fourth-largest telco, having acquired M2 in 2016. The group’s brands include Dodo, iPrimus, Commander and Engin. In New Zealand it also owns Slingshot, Switch, Flip, Orcon and 2Talk.

In October, Vocus completed its acquisition of Nextgen Networks. That acquisition included the North West Cable System (NWCS) and the Australia Singapore Cable (ASC) development projects.

In February this year, Vocus reported revenue growth of 404 per cent in the first half. In May the group downgraded its earnings guidance, saying it expected underlying EBITDA of $365-$375 million compared to previous guidance of $430-$450 million.

FY17 revenue was expected to be around $1.8 billion compared to guidance of $1.9 billion, the telco said. Underlying net profit after tax was expected to be in the range of $160-$165 million, down from guidance of $205-$215 million.