The Vocus Group Ltd (ASX: VOC) share price plunged 18% to $3.75 this morning after the home broadband and enterprise-facing fibre-optic internet and data centre group had some bad news for shareholders.
Apparently Vocus's Swedish private equity suitor EQT Infrastructure has withdrawn its $5.25 per share takeover bid after doing just over a week's due diligence in the Vocus data room.
In fact, Vocus shareholders won't like the look of the chart below:
At $3.75 today, the Vocus share price is now 40% below the indicative $5.25 per share price EQT tabled this month. For investors, the big unanswered question is why has EQT become the third private equity group in a couple of years to walk away from a Vocus takeover offer after doing due diligence on the business.
In fairness to Vocus, there could be any number of reasons why the private equity groups walked away—including that the bids were quite speculative in the first place in wanting to have a closer look at the business, without a genuine commitment to proceeding with the bids.
Vocus also has a net debt load of $1.1 billion, and NBN-facing consumer broadband and business internet businesses as a result of its M2 Group merger that are lower quality compared to its dark fibre assets. As such, it's likely that one issue weighing heavily on the minds of any potential private equity buyer is how much they could sell M2 or float the assets for in a bid to reduce the debt and restructure the business.
Recently, energy retailer AGL Energy Limited (ASX: AGL) admitted it was interested in a takeover tilt, with others in the private equity space also reported to still be interested.
In the meantime, here are two skyrocketing shares going in the opposite direction…
