Australia’s ISP landscape is set to change dramatically after an announcement to the stock market that TPG plans to acquire iiNet. The deal is worth a massive A$1.4 Billion. This price tag equates to $8.60 per share, a $1.80 premium of the current $6.80. This number is higher than iiNet shares have ever achieved on the ASX. The best recorded price for iiNet was $8.36 back in December. TPG have said it would also pay the company’s planned midyear dividend of A$0.105 a share.
In a joint statement to shareholders, TPG and iiNet directors unanimously recommended the offer to shareholders. iiNet shareholders will vote on the deal at their annual general meeting in June.
If you’re thinking this offer came out of the blue, it certainly is easier to understand when you realise, TPG already owns 6.25% of iiNet. This move to increase their share to 100% demonstrates a recognition of the value of the brand and their customers and want in, all in.
The deal is required to get regulatory approval as the result of TPG acquiring iiNet, would be the creation of one of the largest ISPs in Australia, a combined subscriber base of around 1.7 million.
Whenever changes like this happens in the industry, user’s get nervous about the change. In reality the acquisition is likely to create a comprehensive portfolio of offerings at all price points, from the value offerings, right through premium services and pricing. It’s unclear at this stage if the iiNet brand will be retained, but given its profile, that’d be a safe bet.