EQT terminates $2.6b Vocus acquisition

Shares in the company fell 20% to as low as A$3.68 apiece following confirmation on June 4 that the deal would not proceed. The stock jumped about 20% to a two-year high of A$4.72 last month when EQT proposed a buyout at A$5.25 per share. It was trading at A$3.72 as of midday June 5.

EQT has not elaborated on the rationale behind its decision, which ended an accelerated and non-exclusive due diligence process. It follows the withdrawal of bids by KKR and Affinity Equity Partners in 2017 that each valued the company at about A$2.2 billion. The KKR and Affinity withdrawals followed closely on a disclosure of a non-cash impairment of A$1.5 billion for the 2017 financial year.

Vocus recorded a 2% increase in revenue during 2018 to A$1.9 billion, citing an Australian expansion drive and stronger sales in its long-haul network, which extends to parts of Southeast Asia, the US, New Zealand, and Hong Kong. Profit came to A$61 million compared to a loss of A$1.5 billion the prior year, which was attributed in part to the acquisition of local telecom Nextgen Networks.

"[W]e are in the early stages of a business turnaround," Vocus CEO Kevin Russel said in a statement. "We have great confidence that our strategy will deliver significant value to our shareholders in the medium to long term. There is growing demand for our strategically valuable network assets, and we have a substantial opportunity to gain market share in Vocus Networks, which is the core of our business"

Vocus claims to be Australia's second-largest intercity network services provider with 30,000 kilometers of terrestrial cable supported by 4,700 kilometers of submarine cable connecting with Singapore, Indonesia and offshore oil and gas facilities. The company connects more than 5,000 buildings across Australian capital cities and provides near-connectivity to another 20,000 buildings. Plans to tap increasing demand for data infrastructure include an upgrade to 5G capability.

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• Topics
• Australasia
• Infrastructure
• Buyouts
• Australia
• EQT Partners
• TMT