After months of speculation and a bidding war with a fellow telco, TPG has been given the green light to acquire iiNet from the smaller internet service provider’s shareholders.
Shareholders in iiNet voted yesterday to emphatically approve the deal, with 95.09% in favour.
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The deal is valued at $1.56 billion and if successful, will create Australia’s second largest telecommunications provider.
Even iiNet founder Michael Malone has backed the deal, despite describing TPG’s initial offer of $1.4 billion, or $8.60 a share, as “unprofessional” in March.
The backlash against the deal eventually forced iiNet chairman Michael Smith to apologise for a lack of communication.
TPG subsequently upped its offer to $9.55 a share, after M2, owner of Dodo and iPrimus, also lodged a bid for iiNet. However, the iiNet board chose to support the TPG offer.
The takeover of iiNet now appears all but settled, although TPG must also gain the seal of approval from relevant regulatory bodies, including the Australian Competition and Consumer Commission and the Federal Court of Australia.
If all goes to plan, the transaction will be finalised and new TPG shares will be trading on the Australian Securities Exchange by early September.
The acquisition, once complete, will undoubtedly shore up TPG’s position in the Australian telecommunications market with a combined 1.7 million broadband subscribers, putting it in a stronger position to compete with market leader, Telstra.
Here are four things you need to know about this growing player in Australia’s telco space and the reclusive business pair that founded TPG more than 20 years ago.
1. TPG started life selling PCs and printers
David and Vicky Teoh moved to Australia from Malaysia in 1986 and a few years later founded TPG as a computer equipment business, specialising in hardware such as PCs and printers, while also offering network and internet services.
By 2005, TPG had ceased selling hardware and the small business was a rapidly growing internet service provider. TPG jumped onto the Australian Securities Exchange three years later through a reverse takeover of SP Telemedia.
2. Its founders shy away from the public spotlight
While the Teohs have become regular fixtures on lists of Australia’s wealthy and top entrepreneurs, the pair rarely gives interviews or even allow themselves to be photographed.
Forbes ranks David Teoh as Australia’s 17th richest person, thanks to his and Vicky’s 37% stake in TPG. If the iiNet deal is finalised, the Teohs’ wealth is expected to surge past the $2.6 billion mark and the duo will move into the top 10 wealthiest people in Australia on the BRW Rich List.
3. TPG has grown through acquisitions
Since listing on the ASX, TPG has pursued a growth strategy based on acquisitions.
One of the more prominent deals was in 2010, when the company picked up Brisbane-based internet group PIPE Networks for $373 million.
4. It’s had a stake in iiNet for years
A takeover of iiNet by TPG has long been rumoured. TPG has built up a sizable shareholding in iiNet since 2011
In 2012, the usually tight-lipped David Teoh described TPG’s stake in iiNet as “strategic” but that didn’t stop market speculation that the time would come for TPG to take full control.