Affinity submits $1.6b offer for Australia's Vocus
Affinity Equity Partners has submitted a bid to buy Australian high-speed broadband internet provider Vocus Group for about A$2.2 billion ($1.6 billion), matching an offer made by KKR.
According to Affinity’s proposal, the firm would pay A$3.50 per share, which represents a premium to the closing price of A$3.44 on July 10. Following Vocus’ announcement of the offer that evening the price jumped to A$3.55 at the following day’s opening; at midday, it was trading around A$3.54.
Vocus has agreed to allow Affinity to conduct non-exclusive due diligence as it did for KKR last week. The company’s board stressed that there is no certainty that the process will result in an acceptable offer from either firm, what form such an offer might take, or whether the board will recommend acceptance.
Vocus was founded in 2008 and operates a fiber network that connects all the capital cities and most regional cities across Australia and New Zealand, including more than 5,500 buildings.
Net profit for the 12 months ended February 2016 increased 223% year-on-year to A$64 million, while revenue rose 455% to A$831 million. The company attributed the performance to rising demand from corporate customers, as well as the acquisitions of competitors Amcom and M2 Group.
However, these acquisitions have also contributed to a much weightier debt load. The company’s net debt rose from A$104.5 million in 2015 to A$757.5 million at the end of the last financial year. As of December, it stood at A$988 million.
Hong Kong-based Affinity invests across the Asia-Pacific region. Its fourth pan-Asian fund closed in 2014 at $3.8 billion. Its Australia investments include the live events and ticketing business of Nine Entertainment, which it bought in 2015 at an enterprise valuation of A$640 million.
The private equity firm also continues to hold a stake in poultry producer Tegel Group Holdings, which it bought in 2010 and went public last year through a dual IPO in Australia and New Zealand.
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