Vocus has confirmed rumours earlier this morning that it is subject to a buyout offer - and one that represents a big premium on its Friday closing price.
Swedish-based multinational private equity outfit EQT Infrastructure has made a bid of A$5.25 in cash per share, the company said in a statement to the ASX - valuing the telco at $A3.3 billion ($5b).
Vocus closed Friday at A$3.89, valuing the company at A$2.42b.
As the bell rang after the announcement, the stock jumped to A$4.84.
This morning, industry scuttlebutt said the deal could reanimate plans to spin-off Vocus's NZ operation, which includes Orcon and Slingshot.
Vocus' board - which includes the head of its NZ operation, Mark Callander - said only that after receiving the proposal it granted EQT non-exclusive access to conduct due diligence. The process is expected to take several weeks.
Vocus said to be again the interest of takeover interest, with its New Zealand business potentially back on the block as well. A carve-up would be straight out of the private equity playbook.
The news comes amid something of an Australasian telco deal frenzy, with Infratil and Brookfield's attempt to take over Vodafone NZ (a deal currently before the Commerce Commission) and TPG's attempt to merge with Vodafone Australia across the ditch (a deal being challenged by the ACCC).
In mid-2017, US private equity outfits KKR and Affinity Partners both offered A$3.50 a share for Vocus, valuing the telco (then with a market cap of around A$1.7) at A$2.2 billion.
The offer was rejected, but Vocus did put its NZ assets - including Orcon, Slingshot, Flip 2Talk, power retailer Switch, data centres and the fibre network it bought from FX Networks - up for sale.
But in April 2018, Vocus NZ was pulled from the market. The asking price - never publically revealed - was said to be too rich for short-listed buyers Trustpower and (in partnership with private equity), 2degrees.
Vodafone said it was interested but anticipated too much regulatory headwind. Spark said it was interested and MD Simon Moutter said there was potential to move many of Vocus's copper customer to fixed wireless - thereby increasing price competition and easing the way to potential Commerce Commission approval. However, Vocus's board was said to have not favoured a Spark deal's chances with regulators, at least by its June 2018 deadline.
Vocus's share price - which hit a high of A$9.26 in May 2016 before being hit by an earnings dive associated with integration issues after the company's merger with M2 - collapsed to $A2.43 the day after the KKR and Affinity bids were rejected in August 2017.
However, under new CEO Kevin Russell, shares have rallied. The stock closed Friday at A#3.89, valuing Vocus at A$2.42b.
Vocus NZ has around 200,000 customers, making it the third largest broadband provider after Spark (680,000) and Vodafone (430,000) and twice the size of Intratil-controlled Trustpower and 2degrees in the landline market.
Since the abandoned 2018 sale, Vocus NZ chief executive Mark Callander has gained influence in the group, becoming an executive director and adding the role of CEO of the telco's wholesale operation in Australia to his duties running the NZ operation.
Vocus said its New Zealand business had an 8 per cent increase in underlying earnings to $63m last year on revenue that rose 4 per cent to $364m (both figures $NZD).
Vocus NZ has recently allied itself closely with Vodafone NZ on the issue of unbundling UFB fibre - or taking advantage of a law change that will allow retail telcos to install their own electronics around Chorus fibre, giving them more control around what services they offer.
Vocus NZ, Vodafone NZ get cozy
Vocus and Vodafone has carried out joint lobbying over the unbundled UFB fibre pricing, and say the will collaboratively spend tens of millions on associated infrastucture if Chorus is ultimately nudged into what they see as economic pricing.
The company has been approached for comment.