iiNet is scrambling to explain the 'absurd' $1.4 billion price tag for its planned TPG deal

iiNet marketing material.

Management at Australian internet provider iiNet will today hold a conference call with investors to defend the $1.4 billion price tag set for its proposed buyout by TPG Telecom, which has infuriated some shareholders.

TPG shares rocketed on the day the deal was announced, rising more than 18% to more than $9.15, a sign the market believes the deal contains significant value for TPG.

Paul Hannan, head of iiNet’s biggest shareholder BT Investment Management, said last week it was “absurd” that the strategic assets from iiNet’s network in the deal were cut in “for a bog standard 25 per cent premium”.

Now some shareholders are hoping there could be another suitor to trigger a bidding war. One anonymous major shareholder tells Fairfax Media today the deal was “appallingly incompetent” and that “(hopefully) someone like M2 Group or Optus, who are much better cultural fits, come over the top”.

Today’s conference call between iiNet and investors will be followed by further meetings with shareholders during the week.

A merger between TPG and iiNet would create a telco with 1.7 million customers and around $2.3 billion in revenues.

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