Is a Vocus Group Ltd bidding war about to kick off?

Fairfax media reported this morning that Affinity Equity Partners has joined fellow private equity firm Kohlberg, Kravis, and Roberts (KKR) in bidding for Vocus Group Ltd (ASX: VOC).

According to media reports, Affinity has lobbed a non-binding bid of $3.50 at Vocus, which is the same price and on effectively the same terms as the bid from KKR. With Vocus granting due diligence to KKR, it seems as though Affinity will also be getting a look at Vocus’ books.

Affinity may just wish to see if the company is worth bidding for; no sense in letting a rival have free reign. One thing seems certain though, and that is that there is no certainty that a binding bid will eventuate, either at today’s prices or at a higher or lower price.

Following the reporting of the Affinity bid in the media, Vocus management was forced to release an announcement confirming the receipt of a second bid and the granting of due diligence to Affinity:

“The Board of Vocus now considers that 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 intends to make no further announcements unless the board recommends a bid, or if there is another development that they consider must be disclosed. The board reiterated that Vocus shareholders should take no action.

For shareholders, there is a fair chance that the bids fall through, as both bidders will be focused on buying Vocus at a price that allows maximum possible upside to themselves. We’ll keep you updated.

The Vocus Group share price was $3.45 per share at market close yesterday afternoon.

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Motley Fool contributor Sean O'Neill owns shares of Vocus Communications Limited. 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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