New Bid For iiNet Could Force TPG To Lift Offer
The all-share offer worth of $1.6 billion, tops an earlier offer from TPG Telecom who offered $1,4 billion.
Sources said iiNet’s board and advisers were considering M2’s bid at the weekend and that M2’s bid put a significantly higher valuation on iiNet, though its scrip nature meant iiNet’s board had to determine the value of M2 shares.
iiNet founder Michael Malone has been leading a shareholder revolt against the TPG deal.
M2 has valued its proposal at $11.37 per iiNet share, which would value the Perth based provider at $1.85 billion.
Under the deal iiNet shareholders, would own approximately 42 per cent of the enlarged M2 Group according to observers.
Combining just the share and dividend offer would value the offer around $1.6 billion.
M2 Group told the Australian Securities Exchange that that its competing proposal could offer a number of benefits to iiNet shareholders, including the possibility of deferring capital gains tax.
M2 has also extended an offer for two iiNet directors to join the M2 board as non-executive directors.
M2 had 508,000 broadband subscribers as of December, compared with iiNet’s 975,000 subscriber base. A merged company would have an internet customer base of 1.5 million users.
M2’s bid comes as its share reach record highs. But it is understood that iiNet’s board had already previously rejected the idea of merging with the company because it believed M2’s shares were overvalued.
BT Investment Management is iiNet’s largest institutional investor and has also criticised TPG’s offer as well as the bid process.