May 7, 2015
TPG Group has raised the stakes in the battle for iiNet by offering cash of $9.55 (from $8.60) per iiNet share. The revised bid is a significant improvement from the original offer and comes as a counter proposal to the offer put forward by M2 Group. TPG’s new proposal also gives iiNet shareholders the choice of either a cash offer or a share offer being:
• Cash alternative: $8.80 per iiNet share plus $0.75 fully franked special dividend, OR
• Share alternative: 0.969 TPG shares per iiNet share plus $0.75 fully franked special dividend (share allocation may be subject to scale back).
The current proposal from M2 Group which includes 0.803 M2 Group shares, plus a $0.75 special dividend for each iiNet share, values iiNet at approximately $9.53, but this will vary depending on the share price of M2 Group. The board of iiNet has determined that the revised TPG offer is more favourable to iiNet shareholders and has recommended that iiNet shareholders vote in favour of the new TPG offer.
While it is not certain whether M2 Group will make a counter offer, what is certain is that Australia’s telecommunications landscape is set for change. iiNet combined with either of its suitors will create Australia’s second largest provider of fixed line internet services behind Telstra and ahead of Optus.