iiNet has given TPG Telecom until May 5 to raise its $1.4 billion takeover offer, having determined a counter-bid by M2 Group to be superior.iiNet today advised it has completed due diligence of M2’s proposal, in turn triggering TPG’s matching rights under the scheme implementation agreement originally entered into by iiNet and TPG.
TPG now has three business days to submit a counter-proposal for the iiNet board to consider.
TPG’s originally proposed $1.4 billion transaction would deliver iiNet shareholders cash consideration of $8.60 per share, while M2’s subsequent competing proposal would see iiNet shareholders receive 0.803 M2 shares plus a $0.75 special dividend for each iiNet share.
Under M2’s proposed transaction terms, iiNet shareholders would own approximately 42 per cent of the share capital of the enlarged company.
“We have to recognise that evaluating the M2 and TPG proposals requires careful analysis given TPG is offering cash and M2 is offering shares in a significantly enlarged telecoms company,” iiNet chairman Michael Smith commented.
“There is some judgment required on our part, however we do believe that based on the terms currently in front of us, the M2 proposal warrants triggering the matching right process with TPG. Trading of iiNet shares on the ASX since M2’s announcement of the proposal on 27 April 2015 and the majority of analyst commentary has been consistent with that view.”
If M2 and iiNet have not entered into a scheme implementation deed by 5pm AEST on May 6, M2 has stated that its current proposal will be withdrawn, while adding that it reserves the right to submit another proposal.