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LISTED communications company, Vocus Group (ASX: VOC), has agreed to open its books to US private equity firm Kohlberg Kravis Roberts (KKR) to evaluate a $2.28 billion takeover bid.
Vocus has given the firm access to its books following KKR's non-binding proposal to acquire 100 per cent of the shares in Vocus.
The takeover proposal from KKR will see 100 per cent of Vocus' shares acquired at a price of $3.50 cash per share via a scheme of arrangement.
In May last year, Vocus shares were commanding $9.24.
Vocus will allow KKR the opportunity to conduct due diligence on a non-exclusive basis in order to establish whether an acceptable binding transaction can be agreed to.
In the face of a potential takeover from KKR Vocus Chairman David Spence says the current board is 'well on track to deliver value for shareholders', indicating it believes the current offer is too low.
"The Vocus Board believes that the management of Vocus has established a strong strategic plan which will deliver value for shareholders both in the short and medium term," says Spence.
"While we are confident that the management team can deliver on the strategic plan, we believe it is in the best interests of shareholders to grant KKR due diligence to explore whether a potential whole of company proposal is available that takes into account the benefits that the plan delivers."
KKR's proposal is subject to several conditions in addition to due diligence, including the unanimous recommendation from the Vocus board.
In May, the company which owns iPrimus and dodo among other assets, shocked the market with a profit warning that it was going to wipe $100 million off its revenue target.
That announcement sent shares into a 30 per cent freefall as the company blamed revenue delays on major project contracts and lower earnings from its recently launched New Zealand energy business.
However, Vocus' half year numbers for 2017 included a 400 per cent rise in revenue and a 95 per cent surge in statutory profit, and its current share price and potential value is the attraction for KKR.
The company, number 39 on our 2017 Top 50 Melbourne Companies list, also owns telecommunications networks in Australia and New Zealand and connects all capital cities and most regional cities in both countries which directly reaches more than 5,500 buildings.
Business News Australia
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