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M2 places competing $1.3 billion bid for iiNet

M2 Group has launched a counter bid to purchase Perth-based iiNet in an all-share offer worth over $1.3 billion (A$1.6 billion).

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. 

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