ACCC Defers Final Decision On TPG-iiNet Acquisition, Seeks Further Comment
In particular, the ACCC is assessing the impact of the acquisition on the market for the supply of retail fixed broadband services.
In releasing its Statement of Issues today outlining its preliminary views, the ACCC stated it believes the acquisition is unlikely to raise competition concerns in other markets, including in relation to the supply of wholesale transmission (or backhaul), mobile broadband and voice services.
TPG first moved on the proposed acquisition in March, with iiNet backing TPG’s original offer.
M2 Group subsequently submitted a competing proposal, and, having determined M2’s counter-bid to be superior, iiNet triggered TPG’s matching rights. At the beginning of May iiNet backed an increased offer from TPG.
TPG’s revised offer is for $9.55 per iiNet share, incorporating a $0.75 special dividend, with TPG also proposing a capped scrip alternative of 0.969 TPG shares for each iiNet share held by shareholders that elect to roll over their holdings.
The revised offer was up by almost a dollar from TPG’s original proposal of cash consideration of $8.60 per share.
In backing TPG’s revised offer, iiNet chairman Michael Smith noted both its increased value and the flexibility offered by the scrip alternative.
However, should the ACCC block the proposed acquisition, M2 will be in the driver’s seat to proceed with its offer, while, should the TPG acquisition be given the go ahead, M2 could well reconsider its original offer and put in another competing bid.
Optus, also, has been linked to iiNet, with previous speculation it could make a competing bid. All eyes will now be on the ACCC’s final determination.
ACCC chairman Rod Sims stated the ACCC is considering a range of factors in assessing the acquisition.
“The ACCC is exploring the extent to which the acquisition of iiNet will reduce competition by reducing the likely competitive tensions in respect of pricing, innovation and service quality,” Sims stated.
“The ACCC has received a number of submissions from consumers. Their concerns primarily focus upon fears that iiNet’s customer service levels will decline as a result of the proposed acquisition.”
“The ACCC is also considering whether the competitive constraint posed by the remaining competitors, namely Telstra, Optus, M2 and the much smaller market participants, would be sufficient to prevent a substantial lessening of competition in the supply of fixed broadband services. As a general proposition, competition is stronger when the market contains more competitors.”
The ACCC stated its final decision will be deferred until August 20.
The ACCC’s Statement of Issues can be found here.