Australia's TPG Telecom Ltd has announced plans to buy domestic Internet services provider iiNet for AUS$1.4 billion (US$1.1 billion), as the telecoms firm seeks some protection from industry heavyweights such as Telstra and Optus.
As Channel News Asia reports, should the deal go ahead, TPG would trail only Telstra in the fixed-line broadband market, but a counter offer from larger rival Optus may be in the offing.
Shares of both companies hit record highs shortly after the deal was outlined, with iiNet jumping 27.6% and TPG up 17.6% in a weak broader market.
TPG also projected some post-deal figures, stating that it expects to see combined revenues of AUS$2.3 billion and earnings before interest tax, depreciation and amortisation (EBITDA) of AUS$654 million. The acquisition would see TPG provide broadband services to over 1.7 million subscribers.
Australia's new fast broadband network environment has already prompted several small-scale acquisitions, with businesses looking to make the most of the fresh conditions.
TPG Telecom, which held a 6.25% stake in iiNet, is slated to pay AUS$8.60 per iiNet share, with the all-cash deal to be funded by new debt.
However, as Australia's Financial Review reports, the deal could be complicated by one of iiNet's largest shareholders, BT Investment Management, which is objecting to the pricing and structure of billionaire David's Teoh's bid.
Paul Head, BT Investment Management's head of smaller companies, said the fund manager was "disappointed" and has "major reservations" about the bid as it stands.
He added: "We are staggered the board and its advisers doesn't see this and didn't argue stronger for a scrip-based alternative. To have dealt these strategic assets for a bog standard 25% is absurd."