Summary: TPG’s investment in ISP rival iiNet is all about having a seat at the table in the event of any takeover of the company, iiNet has said.
TPG seized upon a dip in iiNet’s share price last year to claim a 7.24 percent stake in the company, but has not pushed for a further stake in it, iiNet CEO Michael Malone said yesterday.
TPG’s investment came at a time when iiNet’s share price was unusually low, Malone said.
“Last year, our share price went to AU$2.16 after Amcom did an in-specie distribution on shares out to its shareholders, which is a very tax-effective way for them to get iiNet shares,” he said. “The downside was our share price went down from AU$2.60 to AU$2.15. TPG stepped in and acquired 7 percent of the company.
“Why? Because they know what a great company it is, and how well run it is, and the price was very cheap.”
Malone said that TPG has not acquired more since then, and that it is still just a strategic investment.
“What would we say their intentions are? It’s a seat at the table at the right time. In the event that someone wanted to acquire iiNet, for instance, TPG would like to either sell into that or be part of it, perhaps. But [TPG executive chairman] David Teoh just refers to it as a strategic investment.”
A surge in iiNet’s share price in July this year led to speculation that TPG may be eyeing a takeover of the company, but the telco giant remained dormant.
Instead, in October, Telstra announced that it would acquire Adelaide-based internet service provider (ISP) Adam Internet for a reported AU$50 million. It was rumoured that TPG and iiNet were both vying to buy out Adam; founder Greg Hicks indicated that a number of companies had approached him, seeking to buy the company out.
The Adam takeover will still require the approval of the Australian Competition and Consumer Commission (ACCC) before it can go ahead; however, due to Adam’s relatively low customer base, it is much more likely to be approved than a TPG takeover of iiNet.