Takeover bid for Vocus
Telco provider’s shares jump on back of $3.4bn proposal from MIRA
TELCO provider Vocus Group says it has received a takeover proposal from Macquarie Infrastructure and Real Assets Holdings and its managed funds that values its equity at $3.42bn.
Vocus said on Monday it had agreed to explore a potential deal and had allowed MIRA to scrutinise its books.
MIRA has made an indicative offer worth $5.50 a share, representing a 26 per cent premium to Vocus’s closing stock price of $4.38 on Friday. Vocus shares shot up 17 per cent in early trade, but were still well short of MIRA’s $5.50 offer.
Vocus has been preparing to spin off its New Zealand communications and energy business via an initial public offering by the end of its 2021 financial year. It said late last year that the move would provide balance sheet flexibility and the chance to review its long-term dividend policy.
Vocus has not paid a dividend since fiscal year 2017 amid fixed-line revenue headwinds from the Australian government-owned National Broadband Network.
It reported a $178.2m net loss in FY 2020, primarily due to a $202.1m writedown of its Australian retail business on the uncertain outlook caused by the coronavirus pandemic.
Chief executive Kevin Russell said in October that Vocus was on track to hit guidance for FY underlying earnings before interest, tax, depreciation and amortisation of between $382m and $397m, an on-year increase of between 6 per cent and 10 per cent. In 2019, EQT Infrastructure mounted a $3.3bn takeover for Vocus, shortly before AGL made an offer, but both walked away after doing due diligence.
Macquarie’s MIRA funds have owned and invested in critical telecommunications infrastructure for about two decades, spanning assets such as fibre and cable networks, broadcast infrastructure, mobile networks and mobile towers.
In 2019, Macquarie’s European Infrastructure Fund 6 finalised buying KCOM Group, a UK provider of essential telecommunications infrastructure and services to households and businesses in the Hull and East Yorkshire region.
Macquarie Group — MIRA’s parent entity — has also pushed directly into the mobile phone market via Nu Mobile, which focuses on mobile phone plans bundled with used handsets.
Vocus is in its third year of a self-described three-year turnaround. Late last year Vocus’s Mr Russell said the company’s planned turnaround was “firmly on track”, and that it had met all aspects of guidance provided in July 2019.
“It’s been a year of a lot of change and events we all know about. We’ve had a strong year of execution, we’re in the second year of a turnaround and we are rock solid on track,” he said.
“We’re in a good place, we’re having a good year, and we’ve got momentum.”