AGL Energy Limited (ASX: AGL) has announced that it has put forward a non-binding, indicative proposal to acquire all shares in Vocus Group Limited (ASX: VOC). Here’s what you need to know.
About AGL and Vocus
AGL is one of Australia’s largest electricity generation portfolio owners and operators and the largest ASX-listed investor in renewable energy. As of 2018, AGL had more than 3.6 million customer accounts.
Vocus is a vertically integrated telecommunications service provider, operating in the Australia and New Zealand markets. Thanks to a merger with M2 Group, it is responsible for numerous retail and business telco brands, such as Primus.
Previous Offers
Late last month, it came to light that AGL was interested in acquiring Vocus and had put together an internal team to crunch the numbers. It was revealed that AGL had put forward a non-binding indicative offer and was seeking access to due diligence material.
AGL’s release on 31st May 2019 stated that they were unable to agree on due diligence terms and the offer was withdrawn.
Vocus received an offer shortly afterwards from EQT Infrastructure for $5.25 per share. After due diligence, the offer from EQT was also terminated.
Newest Offer
AGL has now come back with another non-binding indicative proposal for $4.85 per share, and Vocus has this time given AGL exclusive due diligence access.
The proposal is subject to several conditions, including the four-week due diligence period, unanimous recommendation by the Vocus Board and entry into a scheme implementation agreement.
The agreement would then be subject to shareholder, court and regulatory approvals.
Vocus Managing Director and CEO Kevin Russel said of the proposal, “There is a clear market opportunity for Vocus, which is generating significant interest in our business and our assets.
“We are focused on executing our turnaround strategy and delivering the opportunity in front of us.”
Other AGL News
AGL also put out an announcement after market close on 7th June 2019, stating that an outage at the Loy Yang A power station may extend for seven months and have a material impact on FY20 profit. While AGL does not expect a significant impact to FY19 profit, FY20 underlying profit after tax is expected to be impacted by $60 million to $100 million.
Summary
AGL shareholders have a lot of information to respond to when the market opens this morning so AGL could be among the big movers today. As for the offer to acquire Vocus, it’s early in the process so it would be too soon to speculate on whether the acquisition will go ahead. AGL shareholders should be keeping a close eye on any further announcements.
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Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.