(AUSTRALIA) – Investors in TPG Telecom will have to exercise patience as the outcome of Vocus Group’s $6.3 billion bid to separate its non-mobile fiber assets remains uncertain.
This potential deal, which was initially reported by Street Talk on August 1, is under close scrutiny, with Vocus Group requesting an extension of the exclusive due diligence period, which was set to expire on Wednesday.
TPG Telecom, along with its advisor Bank of America, is in discussions with Vocus about extending due diligence for three to five additional weeks, a move that suggests cooperation between the two parties.
Complexity and size cause delay in $6.3 billion fiber transaction
The delay in finalizing this complex transaction is attributed to its size and intricacy.
Carving out fiber assets is relatively uncharted territory in the Australian market, unlike tower carve-outs that have been executed by Telstra, Optus, Spark NZ, Vodafone NZ, and TPG in recent years.
For TPG Telecom investors, the stakes are high, with the $6.3 billion bid significantly impacting the company’s $10.4 billion market capitalization.
Since the deal’s disclosure on August 1, TPG Telecom’s shares have surged by 11%.
The origins of this deal trace back to a sell-side process for Vision Networks, initiated by Bank of America.
Initially marketed in November 2022 and officially launched in January, Vision Networks, TPG’s non-NBN residential wholesale infrastructure broadband business, was expected to fetch around $1 billion, with Uniti and Pacific Equity Partners expressing interest.
However, Vocus, jointly owned by Macquarie and Aware Super, surprised the market with a bid that was six times higher than the initial price sought.
This expanded offer encompasses TPG’s enterprise, government, and wholesale infrastructure assets, with Goldman Sachs analysts attributing a multiple of approximately 12.9 times EBITDA to Vocus’s bid using 2022 figures.
The new due diligence timeline is expected to extend until around October 3, and TPG’s investors are eagerly awaiting the outcome, hoping that the negotiations will ultimately result in a binding bid.