Should you Focus on Vocus Group Ltd shares?

Earlier this week, Vocus Group Ltd (ASX: VOC) said to private equity firm KKR (and I paraphrase): We’re not cheap, but we are easy.

Focus on Vocus

That was a joke…

Earlier this week, Vocus’s board granted private equity firm KKR an opportunity to look at its books.

Last month, KKR offered to buy the ‘struggling’ telecommunications company at a price of $3.50 per share. It was a speculative and opportunistic offer, in my opinion. After all, the Vocus share price had fallen from $8.90 to a low of $2.37 in less than a year. The offer was also non-binding.

I later questioned if the takeover offer could be a ‘special situation’. At the time, its share price was $3.57 – above the offer price.

Still, I like Vocus’s businesses so I concluded, “Ultimately, I think it’s a case of ‘heads I win, tails I don’t lose as much’.”

Now, with its share price below the tentative offer price from KKR and the Vocus board granting KKR’s investment bankers access to its financials – it may be an even better opportunity.

What I mean is, right now, I think the worst thing that could happen is KKR fails to lodge a binding offer because there is some financial cockroach that rears its ugly head to KKR’s investment bankers during their research.

But, if that’s going to happen, chances are, it’s going to happen anyway. And if you think more cockroaches will crawl out from under the Vocus hood, you should reconsider owning its shares.

Foolish Takeaway

I can understand why the Vocus board has granted access to KKR. Their offer was loose.

While it would be disappointing for the company’s board to recommend an offer for anything under $4 per share there appears to be no harm in letting them look their strategy, in a bid (pun intended) to entice a superior offer from KKR.

If the Vocus share price falls from here, I’ll consider buying a small parcel.

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Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any company mentioned. Owen encourages your feedback. You can follow him on Twitter @OwenRask.

The Motley Fool Australia owns shares of Vocus Communications Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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