The bidding war between TPG and M2 for retail service provider iiNet has taken another turn, with TPG upping its original offer for the current no.3 telecoms service provider by another 11%.
TPG made the first move in the consolidation play in late March with a $1.4 billion bid, amounting to $8.60 a share.
That would have meant a healthy profit for any long-term shareholders. iiNet shares were as low as 20c in the early 2000s after the dot.com boom had taken its toll on the industry.
But it was not considered good enough by iiNet founder and former CEO Michael Malone, despite the iiNet board’s initial acceptance of the offer.
Malone led a shareholder rebellion which opened up the space for a rival bid. Enter M2, which made a $1.6 billion offer late last month.
The iiNet board has now accepted TPG’s revised offer, though some analysts believe there is still a possibility that M2 could make a further bid.
Either way, the door is open to a further concentration of the service provider market as companies seek scale in order to survive the challenges of the superfast broadband market –not least of which is the structure of nbn wholesale charges which favour larger operators