One week after agreeing on exclusive due diligence arrangements, AGL has withdrawn its proposed acquisition of Vocus.
The publicly-listed energy provider told shareholders today it ceased undertaking due diligence due to "no longer being confident" of the value resulting of the proposed acquisition.
AGL managing director and CEO Brett Redman said the company is exploring investment opportunities across three focus areas: optimising its existing portfolio for performance and value; evolving and expanding its core energy markets offerings; and creating new opportunities with connected customers.
“We believe there will be material opportunities for AGL as energy and data value streams continue to converge and the traditional energy sector accelerates its transformation," Redman said.
"The approach to Vocus reflected our view that the Vocus asset base has attributes that could support the execution of this strategy and benefit our customers.
“However, we are no longer confident that an acquisition of Vocus at the proposed terms would represent sufficient certainty of creating value for AGL shareholders.
“We would like to thank the Vocus board and management team for their assistance over recent weeks.”
Vocus closed the half year ended 31 December 2018 with statutory net profit after tax down 56 per cent from $37.3 million down to $16.5 million. Revenue remained almost unchanged at $974.2 million.
“As we have repeatedly said, this is a three year turnaround," Vocus CEO Kevin Russell said. "We have great confidence that our strategy and ability to execute our business plan 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 for Vocus Networks to gain market share. This is the core of our business. The Vocus management team will now be able to focus all of their attention on realising the opportunity that we have ahead of us.”
This is the second proposed acquisition of Vocus to fall through within a month, in late May private equity firm EQT Infrastructure made a $3.3 billion proposal to acquire Vocus Group. The indicative and non-binding proposal barely lasted a week with the companies announcing on 4 June the discussions had ended.
At that time, AGL had confirmed the report from the Australian Financial Review of its intentions to acquire the Vocus Group.
On 11 June, AGL Energy was granted access to conduct a four-week due diligence on Vocus roughly one week after the publicly-listed energy provider withdrew its offer after being "unable to agree to due diligence terms that were acceptable".
AGL's offer was approximately $260 million less than EQT's, which offered a deal valued at $5.25 per share in cash, worth $3.26 billion. The energy provider proposed $4.85 per share, totalling $3 billion.
Two years ago, in July 2017, Vocus found itself at the centre of a bidding war after the company received an acquisition proposal from Asian private equity firm, Affinity Equity Partners.
This followed Kohlberg Kravis Roberts & Co (KKR) plans to acquire Vocus Group revealed a month before, with the US-based private equity firm tabling a $2.1 billion buyout proposal.