The move by M2, which comes less than two months after TPG’s offer, could kick off a bidding war for iiNet which has approximately 1 million subscribers.
In March 2015 TPG, which already owns 6.25% of iiNet’s shares, placed an all-cash offer of $1.1 billion (A$1.4 billion), offering $6.57 (A$8.60) per share.
M2 is offering 0.803 of its own shares for every iiNet share, including a special dividend of $0.59 (A$0.75) per share. The company has valued its proposal at approximately $8.89 (A$11.37) per iiNet share, including A$1.37 per share in synergies.
According to M2, the combination of the share and dividend offer would value its offer at approximately $1.3 billion.
iiNet said it is in discussions with M2 about the terms of the non-binding and indicative proposal. If it endorses the offer from M2, TPG Telecom will have three days to make a counter bid.
The acquisition of iiNet from either company would create Australia’s second largest internet provider and compete with Singtel Optus, presently the second largest internet provider in the country.
