Vocus Group Limited owns and operates independent voice and data networks. The Company offers a range of products encompassing both voice and data to clients in the United States, China, Hong Kong, Singapore, Australia, and New Zealand.
Current advice: Closed.
Latest update – 22 June 2021, 4:15 pm
VOC today held its virtual scheme meeting to vote on the proposed $5.50 acquisition by Macquarie Infrastructure and Real Assets and Aware Super. With (sadly) no competing bids and a board recommendation, the offer on the table was a certainty to complete so we were not surprised to see the deal supported by over 99% of shares voted. The final step remaining is federal court approval, which is typically a formality, so now expect the stock to cease trading on Friday afternoon with payment due on 22 July.
While this investment didn’t go as planned, the final result of 1.3% in roughly four months is better than bank interest and we need to get exposure to as many of these opportunities as possible to be sure of holding the big winners. Hopefully, we will have a new Event Portfolio investment to recycle our capital shortly.
To view the rest of our current Event Trades, please click here.
Recommendation update – 16 June 2021, 9:30 am
The scheme meeting for the VOC deal is set to be held on 22 June so, despite our disappointment that no other bidders have emerged, it is now time to get in our votes for the proposal on the table. Computershare is the registry handling voting for the scheme, and investors can vote by visiting the Computershare website at https://www.investorvote.com.au/Login?cn=5082&AspxAutoDetectCookieSupport=1 . To vote, you will need your holder identification number (HIN) which can be found on the proxy form sent with the scheme booklet. Once you have accessed your holding, follow the prompts until you get to the voting page, and we recommend members appointing the Chairman as proxy and voting ‘FOR’ the proposed resolution.
Assuming no other bidders emerge and that shareholders support the deal, VOC will cease trading at the close of trade on 25 June with payment of $5.50 due to be paid on 22 July. We will update members once the scheme meeting results have been published.
Recommendation update – 18 March 2021, 10:00 am
Members were able to get set in VOC since we recommended the stock last week, and the logic behind the investment was the view that VOC has attracted a lot of interest in the past because of its strategically valuable assets (its fibre network, in particular) and we would expect at least several would-be predators to cast a glance now that the company is about to fall into the hands of MIRA and Aware Super.
The biggest deal of last week was the takeover deal agreed between Tilt Renewables (TLT) and PowAR/QIC which would see TLT bought at a price of NZ$7.80 per share. We haven’t recommended TLT because of the illiquidity of the stock – as well as the fact that the deal was announced at the conclusion of an extended sales process which lowers the chance of a competing bid – but the interesting sidenote to the deal is that TLT’s major shareholder is New Zealand’s Infratil and will end up pulling around $1.8bn out of TLT. Infratil (IFT) is a diversified group which has significant exposure to the telecommunications sector in NZ through Vodafone NZ and also has telco infrastructure assets, so VOC would seem a logical fit for IFT if it decided against returning that capital to shareholders (which we don’t think is likely).
The fact we are able to buy into VOC below the bid is very attractive given the not-too-insignificant chance of competing bids, and we remain happy to buy the stock at around $5.43.
Recommendation update – 09 March 2021, 11:00 am
VOC finally looks set to end its run of misery as it signed a scheme implementation deed with the consortium of Macquarie Infrastructure and Real Assets (MIRA) and Aware Super. VOC shareholders will be pleased that due diligence didn’t uncover any skeletons in the closet and the final price of $5.50 is the same as the indicative price when MIRA first approached VOC.
The takeover is the culmination in a three-year turnaround strategy implemented by CEO Kevin Russell, and MIRA and Aware now provide the capital to drive the business further. There is speculation this move by MIRA is a prelude to trying to bid for the NBN assuming it is privatised, but the retail assets such as Dodo and iPrimus may complicate this but they are not likely the assets MIRA is after. The fibre optic network is the jewel in the crown, and the question for us is whether this deal will now draw interest from other suitors. In 2018, both AGL Energy (AGL) and private equity group EQT conducted due diligence after indicative offers below $5.00, but VOC was in a very different position then compared to now. Given no other suitors have emerged during due diligence, you would have to conclude a counterbid isn’t highly likely but sometimes seeing an asset of interest fall into another’s hands can be a catalyst to make a move.
VOC has opened this morning at $5.43, and with the deal expected to be completed in July there is an arbitrage of 1.3% (or less than 5% annualised) which isn’t amazing but, given the low risk that the deal falls over, is a solid entry point considering the interest the company has received in recent years. We are therefore happy for members to buy VOC at around $5.43 (and no higher than $5.45) for a low-risk Event Portfolio investment on the hope of further bids.
