New offer for Vocus

Asian firm joins US giant in bid for Australian telco

ASIAN private equity firm Affinity Equity Partners has tapped into a $ 2.2 billion bidding war for Australia’s fourthbiggest telecommunications company, Vocus Group, rivalling a similar offer from the US.

Vocus, which has rapidly expanded through a series of mergers and acquisitions, said Affinity put forward a $ 3.50 a share indicative and non- binding proposal late on Monday.

Investors took a liking to the news and sent Vocus shares up 2.6 per cent to $ 3.54.

The new bid comes less than a week after Vocus opened its books for non- exclusive due diligence by US private equity giant Kohlberg Kravis Roberts, which in June offered a similar $ 3.50 a share takeover proposal.

The telecom provider said its board had decided to also allow Affinity to conduct due diligence on a non- exclusive basis, in order to establish whether an acceptable transaction could be agreed.

“The proposal is subject to due diligence and conditional on a number of other matters substantially similar to those in the KKR proposal,” Vocus said in a statement.

“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.”

Vocus’ management has grappled with a rush to expand that began in December 2014 with a $ 1.2 billion Amcom merger, followed by a $ 3.8 billion merger with M2 Group and October’s $ 807 million acquisition of Nextgen.

Investors were shocked in May when the owner of internet providers dodo and iPrimus cut its annual guidance for a second time in six months, citing a raft of problems on the back of its rapid expansion.

That news sent its shares tumbling to a three- and- ahalf- year low of $ 2.35.

Vocus reaffirmed its revised guidance in early June, with full- year underlying profit expected to come in between $ 160 million and $ 165 million.

Vocus said yesterday it would not make any further announcements unless and until a recommended offer was secured, or if there was a development which required disclosure.