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Featured, News, Telecommunications - Written by Renai LeMay on Thursday, December 22, 2011 16:25 - 49 Comments
iiNet to buy Internode
news iiNet has revealed it will buy fellow Australian Internet service provider Internode, in a surprise pre-Christmas announcement this afternoon which will dramatically consolidate Australia’s broadband sector ahead of the rollout of the National Broadband Network.
The $105 million deal will add some 190,000 broadband subscribers and some 260,000 active services to iiNet’s already extensive customer base, as well as adding annual revenue of about $180 million and annual earnings of about $25 million to the Perth-headquartered ISP. In addition, the acquisition will extend iiNet’s current ADSL infrastructure by about 36 telephone exchanges.
The acquisition itself will be funded by the issue of approximately 12 million iiNet shares to Internode’s principle shareholders, Simon Hackett, with the balance to be paid in cash (minus Internoe’s existing debt) from iiNet’s existing reserves and an extension of the company’s current debt facilities. iiNet will wind up with a debt balance of about $250 million following the transaction, which is expected to be complete by 29 February 2012.
Following the acquisition, Internode will trade as a separate business unit and will continue to be managed by its current managing director Simon Hackett, and his existing team.
In a statement announcing the deal, iiNet chief executive Michael Malone said it strengthened iiNet’s position as “the leading challenger brand” in Australia — ahead of Optus — and the number two provider of ADSL broadband locally.
“Internode is an attractive acquisition, consistent with our strategy of building scale in anticipation of the national broadband network (NBN) market,” he said. “Internode’s experienced management team and excellent customer satisfaction record will allow iiNet to efficiently grow its presence in the South Australian and Eastern State markets.”
“Internode is a successful company with an impressive reputation,” said Mr Malone. “The two companies are clearly a good fit with their strong cultural alignment, industry-leading customer service and shared commitment to innovation.”
In iiNet’s statement, Hackett said he and his team were “delighted” to be merging with iiNet and were excited about the opportunities ahead.
“This is a unique opportunity to increase our presence nationally.” Mr Hackett said. “Internode’s track record of consistently topping national ISP customer satisfaction surveys matches iiNet’s own customer focused corporate strategy. The best teams in the business have joined forces at last.”
“We have highly compatible business approaches, unrivalled excellence in innovation around networks, technology and content, and we gain the obvious benefits of substantially increased scale. The transaction will cement a strong and sustainable future for Internode, our staff, and our customers nationally”.
Hackett’s stake in iiNet, once the settlement is complete, will see him own a shareholding in iiNet of more than 7.5 percent. Malone himself is believed to hold close to 12 percent of iiNet.
iiNet noted in its statement that Hackett had agreed to ‘standstill’ and ‘tender’ provisions with iiNet for a period of 12 months from the period of date of completion. Under the standstill provision, Hackett is prevented from acquiring or soliciting a shareholding in iiNet greater than 7.5% of its issued capital. Under the tender provision, Hackett has agreed to tender his shareholding in iiNet into any takeover offer, scheme of arrangement or other merger recommended by a simple majority of the iiNet board. The news comes as the future of iiNet itself continues to be in play, with rival ISP TPG having recently upped its stake in the company. TPG now owns a total of 7.24 percent of iiNet.
Malone said the merger with Internode strengthens the Company’s position in the NBN environment and will allow iiNet to leverage the market opportunities presented from a base of greater scale. “This transaction consolidates iiNet’s national presence by bringing together the two leading customer service focused brands in the industry.” he said. iiNet is being advised in the deal advised by Azure Capital Limited with legal advice being provided by Middletons. Malone and Hackett are slated to hold a press conference at 4:30 this afternoon.
I’ll follow up this article with quite a lot of analysis of this situation, but I will note that on the face of it, it looks like a rather good way to block a TPG buyout of iiNet.
Image credit: Internode
Enterprise IT, News - Apr 17, 2014 16:39 - 0 Comments
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News, Telecommunications - Apr 17, 2014 11:01 - 146 Comments
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Digital Rights, News - Apr 17, 2014 12:41 - 15 Comments
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