TPG Telecom Ltd (ASX: TPG) shares are sinking on Monday morning.
At the time of writing, the telco's shares are 9% to $4.94.
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Why are TPG shares sinking?
Investors have been selling the company's shares this morning after the company released an update on its discussions with rival Vocus.
As a reminder, in August, TPG shares charged higher after it confirmed talks with the Macquarie Group Ltd (ASX: MQG) owned telco in respect to a "multi-billion-dollar sale and leaseback." It advised:
As part of that [strategic review] process, Vocus Group made an indicative, highly conditional, non-binding offer to acquire certain of TPG's Enterprise, Government and Wholesale assets and associated fixed infrastructure assets, including Vision Network, for approximately $6.3 billion.
What was today's update?
When announcing the discussions, TPG warned that "there is no certainty an agreed transaction will eventuate."
Unfortunately, that is exactly what has happened this morning, with TPG advising that it "has ceased discussions with Vocus Group with regard to Vocus' non-binding offer to acquire certain of TPG's Enterprise, Government and Wholesale assets, including Vision Network."
Management explained that the two parties couldn't come to an agreement on the operating model and commercial terms. It said:
The proposed transaction involved considerable complexity and, ultimately, the parties have been unable to reach alignment on the operating model and commercial terms for TPG to have sufficient confidence that a successful transaction can be agreed and executed.
However, this may not be the end of the story. It concludes:
TPG remains committed to exploring options to deliver value for shareholders. Noting ongoing strong interest from potential strategic and financial investors in the Company's fixed infrastructure assets, TPG will continue to assess value-optimising alternatives and continues to work with Bank of America on our strategic review.
TPG shares are now up just 2.5% over the last 12 months.
