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Ann: AGL: AGL ceases due diligence on Vocus, page-52

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BobbyKennedy

7,556 Posts.

1776

17/06/19

14:06

Post #: 39094462
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Originally posted by goosmurf ↑

Firstly some facts:

Kevin Russell was appointed CEO commencing 28 May 2018.

KKR and Affinity lobbed non-binding proposals in July of 2017.

You can argue the board granted "4 sets of DD" but the board has also changed significantly between July of 2017 and now.

As to why DD is granted, two words: Fiduciary Duty.

As to what AGL pulling out means: maybe a lot, maybe not much; it all depends on your interpretation of AGL's interest in Vocus.

AGL's primary business is clearly not telco. Vocus has a small but growing retail energy customer base. If you look at the media reports around AGL's interest in Vocus there's a lot of speculation but it's evident that no one really knows what AGL saw in Vocus.

Which is to say that whilst AGL may not have valued Vocus sufficiently to continue DD or to make a binding offer, it doesn't imply that Vocus itself is not valuable. It is simply not worth enough to AGL.

IMO the sell off is overdone; shorters capitalising on the signalling effect of AGL's withdrawal. If I were in their shoes I'd do it too.

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EV / EBITDA around 8.5 (assuming $1B net debt and low end of guidance of $350m). That must looking good to someone.
VOC Price at posting: $3.21 Sentiment: None Disclosure: Not Held
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