June 4, 2019 / 9:28 AM / 5 months ago

Sweden's EQT cuts the cord on $2.3 billion offer for Aussie telco Vocus

(Reuters) - Vocus Group Ltd on Tuesday said Swedish private equity firm EQT Infrastructure had withdrawn its A$3.3 billion ($2.30 billion) buyout offer, making it the fourth suitor to drop its bid for the telecoms company in the last two years.

“Following an accelerated period of due diligence, EQT has decided not to proceed with the transaction outlined in the indicative proposal,” Vocus said in a statement. A spokeswoman for EQT declined to comment on the development.

The withdrawal comes just a few days after Australian energy retailer AGL Energy Ltd revealed it had made and then ditched a takeover offer for Vocus as it could not agree on due diligence terms with the telecoms firm.

U.S. buyout firm KKR & Co Inc and Asian peer Affinity Equity Partners had pursued and then abandoned their own plays for Vocus in 2017 after a string of profit warnings from the telco.

Australia’s fourth-biggest internet provider had issued several profit warnings, lost its chief executive and had to scrap the sale of its New Zealand arm, as competition in recent years had cut its profit margin.

Competition in the industry has also prompted TPG Telecom Ltd and the local arm of Britain’s Vodafone Group PLC to pursue a A$15 billion merger.

After struggling over the past two years, Vocus appeared to be poised for a second wind, with the company pursuing forays into fiber-optic infrastructure over its traditional internet services. The company had in 2018 separated the enterprise and wholesale arm of its Australia business into two operating segments.

The move into fiber optics would have also aligned the company with EQT, which seeks equity investment in medium-sized infrastructure companies, according to its website.

EQT’s offer, which at the time was at a 35% premium to Vocus’ previous closing share price, had come just as Vocus’ turnaround plan was beginning to gain traction. The company had allowed EQT to conduct non-exclusive due diligence.

Vocus on Tuesday also reiterated its fiscal 2019 underlying core earnings forecast range of A$350 million to A$370 million.

Reporting by Ambar Warrick in Bengaluru; Editing by Uttaresh.V and Christopher Cushing

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