Vocus shares crash

VOCUS has lost nearly a third of its value after AGL Energy abandoned a $3.02 billion takeover bid less than a week after making a second tilt at the internet provider.

AGL announced yesterday it was withdrawing its latest non-binding, indicative proposal to acquire the iPrimus and Dodo owner due to doubts the deal would benefit shareholders.

Investors appeared to agree, with AGL shares rising by as much as 2.8 per cent in the wake of the announcement.

At the close, they were still 1.58 per cent higher at $19.88. Vocus shares, however, went hurtling in the other direction and dropped more than 30 per cent to hit a near six-month low of $2.97 shortly after the open.

RBC analyst James Nevin said AGL’s $4.85 per share move for Vocus would have been a step too far despite the energy provider looking to fast forward its evolution away from wholesale generation.

Mr Niven also suggested the bid may have been opportunistic with Vocus going through a turnaround.

“We view the natural progression for the electric utility industry to provide more inhome services and management of energy usage as an evolution over time that AGL can manage organically as its customers organically start looking for these services,” Mr Niven said in a note.

“We do not think that AGL needs to own the fibre infrastructure in order to provide these types of services and can contract the data services required.”

Shares in AGL slumped on news of its approach for Vocus last week, with analysts questioning the value of the deal.

AGL’s bid came less than a week after Swedish private equity firm EQT Infrastructure scrapped its own $3.3 billion takeover tilt at the Sydneybased telco firm.

AGL had already withdrawn a non-binding takeover offer prior to Vocus’ failed EQT negotiation.

Vocus chief executive Kevin Russell said in a release on Monday there remained growing demand for the company’s “strategically valuable network assets” despite four suitors now having walked away from a deal.

“As we have repeatedly said, this is a three-year turnaround,” Mr Russell said. “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.”

Mr Niven said, while it appeared AGL was looking to push into the area of data value streams more quickly than anticipated, the company may be better off partnering with or acquiring one of the 180 or so residential resellers listed on the NBN website.

At day’s end Vocus’s share price was 24.54 per cent lower at $3.29.