iiNet to buy Netspace for $60-75m?

Renai LeMay
Thursday, 11 March 2010 05:58

IT Industry - Strategy

Microsoft Office 365

Challenger internet service provider iiNet has put its shares into a trading halt following press speculation that it is in talks to acquire rival Netspace for between $60 million and $75 million.

The company told the Australian Stock Exchange it wanted time to respond to an article in this morning’s Australian Financial Review. In the article in the speculative “Street Talk” section of the AFR, the paper reported it was believed a deal would be announced within two weeks, with a price tag of between $60 and $75 million.

The AFR article is not available online, but Fairfax stablemate MIS Australia has reported that another third party is also believed to be interested in acquiring Netspace.

Netspace was founded in 1992 by its current managing director Stuart Marburg, and technical director Richard Preen, while iiNet is led by chief executive and founder Michael Malone (pictured).

Currently the company has around 80,000 customers Australia-wide. It has historically had a strong presence in Melbourne — as compared to iiNet’s historical roots in Perth — and also in Tasmania. It is not listed for public trading but is privately held.

Netspace is one of a clutch of companies which also includes iiNet, TPG, Adam Internet, Amcom and iPrimus that make up the second tier of major players in the Australian telecommunications landscape.

iiNet and TPG particularly have a history of acquisitive behaviour. Among iiNet’s major acquisitions include the buyout of fellow Perth-based ISP Westnet, while TPG merged with Soul in 2008 and subsequently is in the final stages of acquiring wholesale fibre backhaul player Pipe Networks.

Image credit: iiNet