It's fourth time unlucky for Vocus Group Ltd (ASX: VOC) shareholders after AGL Energy Group Ltd (ASX: AGL) became the fourth interested buyer in 18 months to pull a takeover bid for Vocus and its combination of fibre optic infrastructure assets, alongside an NBN-facing consumer internet business.
"We are no longer confident that an acquisition of Vocus at the proposed terms would represent sufficient certainty of creating value for AGL shareholders," commented AGL CEO Brett Redman.
It was only 5 working days ago on June 11 that Vocus granted AGL "exclusive access to conduct due diligence" after it tabled an indicative $4.85 per share bid for Vocus.
The brief conclusion to the talks suggests Vocus's management was pressuring AGL to come to a decision quickly given its recent past, while cynics will suggest this is more confirmation Vocus has more baggage than Louis Vuitton given KKR, Affinity Partners, EQT Infrastructure and AGL have now taken a look at it, but decided not to proceed.
In making its bid, AGL reportedly thought Vocus's home broadband business under the Dodo brand might provide it an opportunity to "bundle" home internet and electricity products, while Vocus's fibre-optic internet infrastructure assets are its crown jewels that probably still offer good growth potential to any buyer.
As I've written many time before I suspect it's the assessed value or underlying quality of the legacy M2 Group assets under the Dodo, iPrimus and Commander brands that caused most of its suitors to walk away, not forgetting that Vocus Group's founder James Spenceley also sold his entire shareholding in the combined group not long after he agreed the M2 Group merger.
The other elephant in the room is Vocus's approximate $1.1 billion net debt load that means any purchaser of the group is taking on a lot of risk, including the risk of stuffing up your whole career if the acquisition turns sour.
