iiNet chairman Michael Smith has confronted investors agitated by the company’s proposed takeover by TPG Telecom on a conference call this afternoon.
Some of the telco’s shareholders have publicly said they believe the $1.4 billion TPG would pay for iiNet is too cheap.
Smith said on the call that TPG’s plans to maintaining the iiNet brand was evidence that that the synergies between the companies were limited.
One critic is BT Investment Management, which has a 5.7% holding, The fund manager says the prize of significant synergies needs to be shared with iiNet shareholders.
And Michael Malone, iiNet founder and a former CEO, wants shareholders to reject the bid. “My family and I do not believe this deal as it is structured is in the best interests of shareholders, staff or customers,” he said.
Malone said the board had “run out of ideas” .
However, Smith told the call: “We’ve got lots of ideas. Michael hasn’t been in our board room for over a year.”
He said there had been no synergies discussed with TPG and certainly none involving shedding staff.
A special dividend will be paid if shareholders vote at a meeting in June to accept the bid. Subject to a favourable ruling from the Australian Tax Office, the maximum dividend possible will be paid.
This is on top of the dividend to iiNet shareholders of $0.105 per share due to be paid today.
Smith said: “The directors of iiNet unanimously recommend the scheme as they believe it is in the iiNet shareholders best interests and intend to vote shares in their control in favour of the proposed scheme, in the absence of a superior proposal.”
TPG is paying $8.60 cash for each iiNet share.
Smith said: “This is money on the table, it’s a significant premium, there is no risk in it … we recommend that you accept this.”
The combined companies will have 1.7 million customers, revenue of $2.3 billion and staff of about 5,200.
Here’s how iiNet directors see the size of the offer:
iiNet shares are trading near the offer price at $8.85.
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