iiNet shareholders give AAPT deal the green light

Stuart Corner
Wednesday, 29 September 2010 18:35

IT Industry - Deals

iiNet shareholders have voted overwhelmingly in favour of the company's acquisition of AAPT's Consumer Division, announced in July.

Completion is set to occur on 30 September. iiNet CEO, Michael Malone told shareholders at the EGM ahead of the vote: "The AAPT Consumer Division comprises approximately 113,000 broadband subscribers and over 251,000 other active services. The proposed transaction is a unique opportunity to acquire a business of scale in an increasingly consolidated market and significantly strengthens iiNet's presence in the eastern states."

He said the deal would make iiNet,  "the clear leading challenger brand in the Australian telecommunications market ...[with] more than 1.3 million customer services, including in excess of 650,000 DSL subscribers, the second largest in Australia."

He added that post-acquistion the company would have over 2,000 staff across four countries. 'iiNet's significant scale position, combined with our ever growing suite of cool products, well known brands and market leading service levels uniquely positions the company for continued growth in the changing industry landscape.'

The $60m acquisition price represents a three times expected post-synergies EBITDA multiple and is expected to be accretive on an EPS basis in this financial year. It has been funded from cash on hand and debt, and Malone said iiNet would retain a comfortable and conservative debt position post acquisition.

As part of the agreement with AAPT, its parent, Telecom New Zealand, on 30 July, sold down its entire stake in iiNet (18.2 percent) to institutional and sophisticated investors. iiNet said that this had "significantly increased iiNet's free float," and from 20 September had elevated iiNet into the S&P/ASX 300 Index.