US private equity giant Kohlberg Kravis Roberts has moved a step closer to a takeover of Vocus Group with the telco's board opening its books to a non-exclusive due diligence.
KKR had announced a conditional $3.50 a share takeover proposal for Vocus on June 7, valuing the telecom operator at $A3.3 billion, a far cry from the almost nine dollars a share Vocus was commanding in August last year.
At 1020 AEST, Vocus shares were ahead by three per cent, at $3.41.
On Wednesday, Vocus said its board had carefully reviewed KKR's proposal and decided to allow due diligence in order to establish whether an acceptable transaction could be agreed.
"While we are confident that the management team can deliver on the strategic plan, we believe it is in the best interests of shareholders to grant KKR due diligence to explore whether a potential whole of company proposal is available that takes into account the benefits that the plan delivers," Vocus chairman David Spence said.
Vocus said it will update shareholders in due course.
KKR's offer is subject to shareholder and regulatory approval, including a nod from the Foreign Investment Review Board; due diligence and a unanimous Board recommendation.
Vocus, which has expanded to become Australia's fourth-biggest telecommunications company through a series of mergers and acquisitions, cut its full year profit guidance in May, for the second time in six months.
The company, however, reaffirmed the revised guidance in early June, with full-year underlying profit expected to come in between $160 million and $165 million.
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