No statement from M2Group (MTU) last night on the news that iiNet (IIN) had accepted a new higher $1.56 billion takeover offer from TPG Telecom (TPM) as being superior to that from M2.
The acceptance followed TPG’s move to raise its bid and included a small parcel of shares as part of its higher offer.
TPG’s share component though is limited to 27.5 million TPG shares (or around 18% of iiNet) a move that will limit the dilution of its existing shareholders in TPG including executive chairman David Teoh and Washington H Soul Pattinson.
The total consideration of the deal is $8.80 for each iiNet share plus a 75c special dividend. This was similar to the value of M2’s earlier share-based bid.
“The certain value of cash under the revised TPG offer is preferable on a risk-adjusted basis to the inherently uncertain future value of a combined iiNet and M2 under the M2 proposal,” iiNet said in a statement to the ASX.
"Both offers provide the ability to access the key benefits of receiving scrip and associated capital gains tax rollover relief."
"iiNet will not be signing a scheme implementation deed with M2, so it is assumed that the M2 proposal will be withdrawn by 5pm on Wednesday May 6.”
TPM vs IIN vs MTU – iiNet recommends improved TPG offer
Hopefully there will be a statement this morning from M2Group. Some iiNet shareholders, still moaning and groaning about higher pricdes, will be hoping there will be a new counter offer.
But M2Group it is already pushing its financial limits – it has high debt and to add to that to enhance the offer would test the credibility of the bid.
Will the same moaning and groaning shareholders in iiNet want to take the shares being offered by M2Group in a new higher offer, or will they take as much cash as possible and run?
M2Group has already offered to boost the number of shares on issue by 80% – which is an awful lot of paper overhanging the market.
