Affinity, KKR end takeover talks for Australia’s Vocus

Both GPs had offered A$3.50 per share for the company, for a valuation of about A$2.2 billion ($1.7 billion). Vocus’ announcement of the end of talks on July 21 triggered a drop in the share price to A$2.64, from the previous day’s closing price of A$3.21. The price had recovered somewhat by August 23, closing at A$2.64.

Vocus did not specify why the PE firms withdrew their bids, saying only that they were “unable to support a transaction on terms acceptable to the board.” The announcement followed Vocus’ disclosure the previous week of a non-cash goodwill impairment of A$1.5 billion for the 2016-2017 financial year. The company also announced that its net profit for the year would be A$152 million, below the projection of A$160-165 million.

Founded in 2008, Vocus 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. Customers include corporate, small business, government and residential users. The company’s Australasian infrastructure is also connected to the US, Singapore and Hong Kong.

In recent years Vocus has pursued an aggressive expansion strategy, acquiring its competitors Amcom and M2 Group. The company has credited this growth plan for improvements in revenue, which grew from A$150 million to A$831 million for the year ended June 2016, and net profit, which grew from A$20 million to A$64 million over the same period. However, the acquisitions also sharply increased the company’s debt load, with net debt rising from A$118 million to A$872 million for the year ended June 2016 and to A$988 million as of December 2016.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Australasia
• Buyouts
• Technology
• Australia
• New Zealand
• TMT
• KKR
• Affinity Equity Partners