AGL drops Vocus acquisition talks

Energy retailer AGL has already pulled out of talks to acquire Vocus for more than $3 billion after less than a week.

Last Tuesday, AGL put forward a non-binding, indicative offer to buy all of Vocus’s shares for $4.85 each, valuing the company at $3.017 billion, while it completed due diligence on Vocus. That deal has been scrapped after six days as AGL is no longer confident it would create sufficient value for its shareholders, according to chief executive Brett Redman.

“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. 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,” said Redman.

“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.”

AGL is the second suitor in as many months to cancel acquisition talks with Vocus. Global investment firm EQT Infrastructure offered $3.26 billion to buy Vocus in May, but binned talks after a week of “accelerated” due diligence.

Vocus’s shares were trading at $4.36 each at the time of writing.

Update: Vocus chief executive Kevin Russell issued the following comment:

“As we have repeatedly said, this is a three year turnaround. 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.”