ASX-listed iiNet has acquired rival player, Netspace, for $40 million just hours after calling a trading halt.
In a statement, iiNet CEO, Michael Malone, said the deal would consolidate the company’s position as the leading challenger brand in the Australian telecommunications market. He highlighted iiNet and Netspace’ complementary geographic footprints, as well as its stronger market position in Victoria, NSW and Tasmania.
The $40m purchase price will be 100 per cent debt funded. The deal should be completed by April 30 and is subject to a number of procedural conditions.
“This acquisition will bring iiNet closer to our target of 15 per cent market share in the fixed-line broadband market prior to the commencement of the National Broadband Network,” Malone stated. iiNet’s market share currently sits at 12.4 per cent. Netspace will see iiNet reaching over 520,000 broadband customers, he said.
“Netspace is a natural fit for iiNet given the strong alignment of the companies’ products, networks and cultures,” Malone added.
Earlier today, iiNet called for a trading halt on its shares pending a new acquisition. The announcement comes just weeks after the ISP confirmed it was in acquisition talks with Netspace, among others.
Early media reports claimed the offer was $75 million, but the telco quickly kyboshed that figure as far higher than any offers on the table.
For its part, Netspace remained opened to negotiations and confirmed it was considering the offer. But according to managing director, Stuart Marburg, it had not actively been looking for an acquisition.
“It makes good business sense for Netspace on behalf of its owners, to consider all relevant opportunities put forward to us,” he said earlier this month in a statement.
As previously reported in ARN, iiNet has been on the hunt for east coast acquisitions to expand its business and expand its geographic footprint out of its home state, Western Australia.