iiWanted: M2 Group potentially outbids TPG with $1.6 billion iiNet bid

iiNet M2 bid

The quest to takeover iiNet received a second bid today, with the M2 Group (which owns Dodo and iPrimus) offering iiNet shareholders $1.6 billion worth of M2 shares and dividends in exchange for the internet service provider.

In March, iiNet arranged a $8.60 per share takeover with TPG that amounted to a $1.4 billion all-cash bid.

The M2 bid is notably higher on face value, though the iiNet board are obliged to investigate the value of the M2 shares that will be exchanged before it can formally agree and recommend the offer to shareholders.

According to The Australian Business Review, the news of M2's bid sparked a 12 per cent surge in iiNet share prices.

M2 or TPG: Which one will "connect better"?

If the M2 deal is accepted, current iiNet shareholders would account for 42 per cent of M2's share base after the merger.

For each iiNet share currently owned by shareholders, M2 is offering to exchange it for a portion (0.82) of an M2 share, plus an additional $0.75 special-one-off-dividend per share.

Based on the current value of M2 shares, the share transaction rates, the value of the dividends and the forecast business growth expected from the amalgamation of these large telcos M2 announced that this bid represents $2.25 billion in total value added.

If the iiNet board feels that the M2 offer is competitive it will have to notify TPG and give them 3 days to procure a counter offer before deciding whether or not to break the acquisition agreement signed in March.

Either way, it looks like iiNet is set to become a smaller part of something bigger in the very near future.

Joel Burgess
Staff Writer

Joel has been the in-house benchmark monkey for the Australian TechRadar team and Australia’s two biggest tech magazines (APC and TechLife) since 2014.