M2 Group: Another day another takeover in telco land

In our view the deal makes good strategic and financial sense for both parties. VOC's offer for MTU (pre yesterday's share price weakness) was A$10.55 which is in-line with our A$10.50 valuation. We think there is a very low chance that TPM blocks the deal. The only way they could do this, in our view, is a full takeover offer for VOC. TPM just acquired iiNet so their balance sheet is stretched. Any potential bid for VOC by TPM would require scrip and/or an equity raising. We give this a very low probability. We make no changes to our forecasts or valuation but set our price target at the implied offer value of A$9.77 and reduce our recommendation from Add to Hold. Read the full post on the Morgans Blog (VIEW LINK)