Competition in the Australian broadband market is about to take another step backwards in favour of consolidation, with TPG announcing it's going to buy iiNet.
iiNet has long been a favourite of Australia's Internet users for doing battle with "big content" over its right to take piracy cases all the way to end users. It won the famous "iiTrial" in 2012, and is currently back in court in the "Dallas Buyers' Club" case.
In announcement (PDF) to the Australian Securities Exchange, the two companies are recommending shareholders of iiNet accept the transaction, which values the target at $1.4 billion.
TPG will be paying $8.60 per iiNet share – a 31 per cent premium on the 11 March 2015 closing price – funded by a new debt facility.
The announcement notes that iiNet's directors unanimously recommend the scheme, with chairman Michael Smith saying the offer is “a significant reward for shareholders” and a measure of the company's “innovation, brilliant service and capacity to add value”.
iiNet has been a customer of TPG's ever since the acquisition-hungry ISP bought PIPE Networks, a key supplier of the dark fibre that connected iiNet's DSLAMs.
However, the NBN rollout will degrade the competitive value of DSL infrastructure and put an emphasis on the subscriber base. The two companies' 1.7 million customers will vault them well ahead of Optus in the broadband customer stakes. ®