TPG Telecom on Tuesday added half a billion dollars to its takeover offer for Australian ISP iiNet, prompting the latter’s board to recommend the deal to shareholders.
The firm is now prepared to pay A$9.55 per share in cash for iiNet, valuing it at A$1.9 billion (€1.3 billion).
TPG agreed to acquire 100% of iiNet for A$8.60 per s hare, or A$1.4 billion, in March, but was drawn into a bidding war when M2 – which provides consumer and business telecoms and Internet services under various brands – tabled a bigger offer.
Last week iiNet acknowledged receipt of M2’s A$10 per share cash and stock offer, which valued iiNet at just over A$1.6 billion, but indicated that it preferred a cash deal. As such, it gave TPG three business days to increase its own bid, which it duly did.
"The iiNet board has determined the revised TPG offer is more favourable to iiNet and iiNet shareholders than the competing proposal received from M2 Group Ltd announced on 27 April 2015, and recommends all iiNet shareholders vote in favour of the revised TPG offer," iiNet said in an Australian Securities Exchange statement on Tuesday.
The combination of the two companies will create a stronger competitor in the Australian fixed broadband market.
iiNet reported 795,000 broadband customers at the end of 2015, while TPG had 786,000.
The iiNet brand will not be lost once the merger is completed. The firm noted that the buyout proposals from both TPG and M2 included the intention to retain the iiNet name, which it claims is synonymous with a high level of customer service.
