M2’s competing bid against TPG values iiNet at $2.25 billion

Photo: iinet.net.au

A competing bid for internet service provider iiNet by M2 values the internet service provider at $2.25 billion, or a 32.2% premium to the $8.60 cash offer from TPG.

M2, which owns Commander, Primus and Dodo, says it would nurture and grow iiNet as a standalone brand.

Under the new offer, iiNet shareholders would get 0.803 M2 shares per iiNet share plus $0.75
cash in a special dividend.

This, M2 says, values the bid at $11.37 per share made up of the current value of the M2 shares being offered ($9.25), the cash value of the special dividend ($0.75) and the value of the expected synergies ($1.37).

Excluding the value of synergies, M2 values its bid at $10 a share, a 16.3% premium to TPG’s $8.60 cash offer.

Other benefits to iiNet shareholders include deferral of capital gains tax which would have to be paid under TPG’s 100% cash bid.

iiNet shareholders would end up owning 42% of the share capital of the larger M2 Group.

The iiNet board says it is considering the new bid and is conducting due diligence on M2. In the meantime, it is still recommending the TPG Offer.

Under TPG’s bid, iiNet shareholders get $8.60 a share cash, about one-third better than the average share price over the last month.

The combined TPG/iiNet would be a major force in Australian telecommunications with 1.7 million customers, revenue of $2.3 billion and staff of about 5,200.

iiNet shares are up 11% to $9.63.

M2 shares are down 8% to $10.59 and TPG shares are trading 5% lower at $9.11.