iiNet has recommended an increased offer from TPG Telecom, with TPG raising its original bid for iiNet following a competing bid made by M2 Group last week.Having determined M2’s counter-bid to be superior to TPG’s original proposal, iiNet last week triggered TPG’s matching rights under the scheme implementation agreement originally entered into by the two companies, giving TPG three business days to submit a counter-proposal.
iiNet today announced TPG’s revised offer is for $9.55 per iiNet share, incorporating a $0.75 special dividend. TPG has also proposed a capped scrip alternative of 0.969 TPG shares for each iiNet share held by shareholders that elect to rollover their holdings.
This is up by almost a dollar from TPG’s original proposal of cash consideration of $8.60 per share. M2’s subsequent competing proposal was for 0.803 M2 shares plus a $0.75 special dividend for each iiNet share.
Under TPG’s revised offer, the total number of new TPG shares available to be issued to iiNet shareholders making the share election is capped at approximately 27.5 million TPG shares.
If the total number of new TPG shares required to be issued exceeds this number, the number of shares each shareholder will receive will be scaled back pro-rata and the balance of the scheme consideration paid in cash.
iiNet stated its board had undertaken “thorough and extensive analysis of both offers in conjunction with its advisers” in determining the revised TPG offer to be more favourable to iiNet and its shareholders, stating the certain value of cash under TPG’s revised offer “is preferable on a risk-adjusted basis to the inherently uncertain future value of a combined iiNet and M2 under the M2 proposal”.
“The board has weighed up both offers and given careful consideration to the merits of a primarily cash-based offer to one which predominantly comprised scrip,” commented iiNet chairman Michael Smith.
“We believe the revised cash offer of $9.55 from TPG is favourable to M2’s predominantly scrip offer. iiNet shareholders may also rollover into TPG scrip instead should they wish to do so, subject to the cap on the total number of TPG shares.”
