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AGL Energy (ASX: AGL) had four weeks to conduct its due diligence for a potential takeover of Vocus (ASX: VOC), but it only needed one.
Following in the footsteps of Swedish company EQT which had pulled out of its $3.3 billion bid for the telco, AGL has determined its lower offer of $3 billion for Vocus wouldn't be worthwhile either.
The company today announced it would cease undertaking due diligence and withdraw its non-binding, indicative proposal.
"AGL is exploring investment opportunities across three focus areas: optimising our existing portfolio for performance and value, evolving and expanding our core energy markets offerings, and creating new opportunities with connected customers," says AGL managing director 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."
He says Vocus' approach reflected AGL's view that its asset base had attributes that could support its strategy and benefit customers. But the value proposition just wasn't enough.
"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.
"We would like to thank the Vocus board and management team for their assistance over recent weeks."
Echoing comments made when EQL backed out of its bid, Vocus CEO Kevin Russell says AGL's decision means the Vocus management team will now be able to focus all of its attention on realising the opportunity ahead.
"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," he says.
"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."
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