Preda­tors mov­ing in

Townsville Bulletin - - NEWS -

Townsville TWO once- were mighty share mar­ket dar­lings are count­ing down to two very dif­fer­ent ter­mi­na­tions.

Shares in pi­ranha le­gal group Slater & Gor­don, which traded as high as $ 7 barely two years ago, are now all­but of­fi­cially worth four- fifths of fiveeighths of very lit­tle af­ter the set­tle­ment of its in­com­ing am­bu­lance- chas­ing le­gal ac­tion from fel­low pi­ranha Mau­rice Black­burn.

In con­trast shares in new- age telco group Vo­cus, which traded up to $ 9 in the fullest flush of in­vestor en­thu­si­asm just a year ago, ap­pear to at least have a not- quite as of­fi­cial base value of $ 3.50.

The rea­son that $ 3.50 is nearly of­fi­cial is that Vo­cus is no Fair­fax. The rea­son that the $ 3.50 is still only nearly cer­tain ( but as a min­i­mum) is that Vo­cus’ two com­pet­ing suit­ors are from the same su­per- greedy bot­tom­feed­ing breed that pur­sued – and aban­doned – Fair­fax.

No Fair­fax? Well, Vo­cus has now re­ceived two com­pet­ing – what are al­ways de­scribed as “pre­lim­i­nary, in­dica­tive and non- bind­ing” – pro­pos­als from ( the orig­i­nal Wall Street main- chancer) KKR and a group called Affin­ity Eq­uity Part­ners.

Both have nom­i­nated $ 3.50 as the “price” to get to look deep in­side Vo­cus. But there’s a very good chance that hav­ing “looked” at least one of them will come back and for­mally of­fer that price, or some­thing quite close to it. And if both come back, you could get a bit of a bid­ding duel. But it’s self- ev­i­dently not go­ing to get any­where re­motely near that $ 9; in­deed it would take a mir­a­cle of sud­denly dis­cov­ered hid­den value in­side Vo­cus for the bid­ding to get any­where near even half that fig­ure.

Two things tem­per the price some­one like KKR and Affin­ity might of­fer for Vo­cus. The share price of even a year ago was vastly in­flated by the “Vo­cus meme” of one of the dy­namic sec­ond- tier tel­cos on the make be­hind the lum­ber­ing big three of Tel­stra, Op­tus and Voda­fone.

The air has gone out of that bal- loon. And se­condly, KKR and its peers are greedy. They never pay gen­er­ous prices. Yes, most of their up­side will come from gear­ing their ac­qui­si­tion, but they still have to get the ba­sic as­sets at a good price.

Two of these groups un­veiled sim­i­lar pro­pos­als for Fair­fax, but af­ter look­ing “in­side” not just one but both walked away.

The broad rea­son was that Fair­fax failed “the ac­qui­si­tion test” de­tailed above for Vo­cus. But be­cause of a big dif­fer­ence: nei­ther of the two suit­ors wanted to buy the ac­tual 160- year old Fair­fax me­dia busi­ness.

Both just wanted to buy its Do- main real- es­tate ad­ver­tis­ing busi­ness.

Vo­cus share­hold­ers will al­most cer­tainly get a rea­son­able and per­haps even rea­son­ably at­trac­tive price for their shares. That’s not go­ing to be the case at S& G.

The pay­ment of $ 36.5 mil­lion to Mau­rice Black­burn – none of which ac­tu­ally comes from S& G it­self – all­but locks in the scheme of ar­range­ment, an­nounced a cou­ple of weeks ago, which will set­tle S& G’s fu­ture. As long as S& G’s “main as­sets” keep walk­ing back into the of­fice each morn­ing – it can go back to its ( hope­fully, profit- gen­er­at­ing) am­bu­lancechas­ing fu­ture.

EYES ON PRIZE: The pi­ra­nhas are cir­cling for new- age telco group Vo­cus, but it’s un­likely to hit its old heights.


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