Vocus Group stock is likely to weaken at the open "as the share price was trading around the potential takeover, not fundamentals," Morgans analyst Nick Harris reckons. 

The telecommunications infrastructure company said on Monday that all discussions with its private equity suitors KKR and Affinity had ceased, with the bidders advising they are 'unable to support a transaction on terms acceptable' with board.
 
"We note that Vocus provided un-audited underlying 2017 financial year net profit after tax which was below the company's guidance range," Harris wrote in a research note to clients.

"One of the exit clauses to the takeover bid by both private equity parties was based on Vocus achieving its FY17 guidance, which has not occurred."

Vocus said an important factor in the board ending the sale process is the company's guidance for the 2017-18 financial year.

The company is forecasting revenue to grow to between $1.9 billion and $2 billion, while underlying earnings before interest, depreciation and amortisation is expected to tick up to between $370 million and $390 million.

Morgans is forecasting 2018 financial year revenue of $1.9 billion and EBITDA of $389 million.

"The board is confident that Vocus can 'deliver a return to sustainable organic growth' in 2018 financial year," Harris noted. "Given several material misses to its own guidance in 2017 financial year, we think the market may remain cautious on this."

In the medium term, Harris thinks there is upside around delivering on the strategies stated at the recent investor day "which aim to make the whole of Vocus more valuable than the sum-of-the-parts."

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Contango Asset Management is seeking to fund its next leg of growth via a share placement, sources told Street Talk. 

The Robert Rankin-backed investment firm's shares were placed in a trading halt on Monday, citing an imminent capital raising. 

Contango is said to be planning a placement of about $4 million as it embarks on growth initiatives. 

They are said to include several new exchange traded funds and recruiting a head of distribution and a team in that area. 

The size of the raising may also suggest that Contango is on the look out for acquisitions. 

Earlier this year, the asset management company launched Contango Global Growth, a listed invested company focussed on international stocks.

Contango also entered the active Exchange Traded Managed Fund Product (ETP) market with Switzer Asset Management. 

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You can feel the tension in the air as Coates Hire's two big shareholders seek to dictate the future of the country's biggest equipment rental company. 

The good news is that Coates' decision to redeploy resources towards east coast infrastructure projects is already paying dividends, with revenue and EBIT well ahead of last year and on track to be up another 10 per cent or more in the coming 12 months. 

That much will become clear when Seven Group presents its annual profit numbers on Tuesday. 

Less clear is maneuvering in the background by both Seven and its fellow Coates shareholder, private equity giant The Carlyle Group.

As Street Talk reported last month, Carlyle wanted to capitalise on Coates' earnings momentum and try and float the company later this year. That plan was blocked by Seven which is of the view that it would be better to book some of the near-term earnings upside and re-consider exit plans in another 12 to 18-months. 

The issue is expected to heat up again this week, with the release of Coates' results. 

There is clearly a gap in the two parties' investment horizons and there has been plenty of poring over the drag-along and tag-along clauses in the Coates shareholder agreement.

Carlyle - which has been at Coates for almost 10 years - is considering its position. If Carlyle finds a buyer for its stake - or the business as a whole - Seven does not have the right to block a sale.

Seven, which is blessed with a share price at close to a 10-year high, has the firepower and strategic case to up its stake. 

Coincidently, the considerations come as global giant United Rentals showed it is not waiting around for Coates when it agreed to pay $US1.3 billion for another US player, Neff Corporation, last week. United Rentals has long been talked about as Coates' most likely trade buyer, but few would expect it to strike in Australia so soon after buying Neff. 

Coates is expected to make about $145 million earnings before interest and tax in the coming year.

Recent deals would value the business at close to $1.7 billion. Coates has about $1 billion net debt, leaving about $350 million equity each for Seven and Carlyle.  

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European buyout firm Permira has stepped back from the $500 million bidding contest for skin and cosmetic treatments business, Laser Clinics Australia.

As the auction enters the final furlong, Street Talk understands Permira is not expected to lob a binding bid by Friday's deadline. The buyout firm was taking counsel from Credit Suisse.

It means Laser Clinics' auction is shaping up as a tussle between private equity bigwigs KKR & Co and Bain Capital, and an industry player in the ASX-listed Australian Pharmaceutical Industries. 

It is unclear whether US-based spa services provider Steiner Leisure, which is owned by consumer-focused buyout fund L Catterton, will participate in the final bid phase.  

Laser Clinics has earnings before interest, tax, depreciation and amortisation in the high $30 millions this year, spiking to the low $50 millions next year, which suggests a sale price in the order of $500 million. 

The suitors and their respective advisers have bunkered down and are thinking hard on the prices they put forward, particularly as several sources point to an earnings multiple of as much as 13 times. 

Listed health and beauty retailer API confirmed it was vying for Laser Clinics after this column revealed its interest earlier this month.  While the company knows the franchising and clinics industry well, it will need to convince investors of the merits of the acquisition after a shock downgrade to earnings guidance earlier this month.

Meanwhile, Bain has its own angle on Laser Clinics after snapping up Hugel Inc, a South Korea-based maker of beauty products including botox, in April. The private equity giant is said to be keen to source botox from South Korea if it wins the Laser Clinics contest, meaning there could be cost synergies baked into its offer.  

Laser Clinics is owned by private equity investor The Growth Fund in conjunction with founders Babak Moini and Alistair Champion. It has more than 60 clinics across the country.

Luminis Partners is managing the auction.

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Mid-market private equity firm Mercury Capital is set to snap up about a 30 per cent stake in data centre and IT services business Interactive Pty Ltd.

Street Talk understands Mercury Capital is in advanced talks to buy the stake from Interactive chief executive Christopher Ride, after Ride and Interactive tested market appetite for the stake and the business as a whole. 

Limited partner sources said the deal had yet to be signed, but Mercury Capital is in the final stages of negotiations. 

The stake is expected to be worth about $150 million. 

Buying the minority holding fits with Mercury Capital's joint venture-style mantra, where it takes stakes in businesses alongside owners and/or management rather than buying them in full.

The firm's other investments include clinical trial manager Novotech, day hospital owner Nexus Day Hospitals, New Zealand printing company Blue Star and Kiwi doctor surgery owner Nirvana Health.

Mercury Capital is expected to join Interactive's shareholder register alongside founder Richard Light, who has a 58.01 per cent stake in the company according to IBISWorld.  

The IT services company reported $158.7 million revenue and $45.9 million in profit before interest, depreciation, amortisation and income tax in the 2016 financial year, which was up from $148.9 million and $45.6 million one year earlier. It had 396 employees as at June 30 last year. 

The investment comes as Mercury,  seen as a quiet achiever on the local private equity scene, seeks a buyer for Novotech, Australia's biggest independent provider of clinical trials for new drugs.

Meanwhile, former Bank of America Merrill Lynch and Nomura dealmaker Grant Chamberlain is expected to join the board of ASX-listed biotech Prima BioMed Ltd. 

Prima BioMed chair Lucy Turnbull has recruited Chamberlain as a non-executive director, with the appointment to begin immediately. 

It comes as Prima BioMed progresses clinical trials for its flagship product, which is aimed at beating certain types of cancer. 

Chamberlain will join the board that also includes Turnbull, stockbroker Albert Wong, scientist Russell Howard, CEO Marc Voigt and Nasdaq-listed Eagle Pharmaceuticals CFO Pete Meyers. 

It's the well-regarded deal-doer's first board role since leaving Bank of America Merrill Lynch earlier this year. Chamberlain was head of M&A and financial sponsors for Australia at the Wall Street giant. 

"We are delighted to welcome Grant to the Prima board. His Australian and international markets experience will be a valuable asset," Ms Turnbull said.  

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