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iiNet founder slams TPG takeover bid, calls on shareholders not to sell

TPG's $1.4 billion takeover bid for iiNet has met with notable criticism from iiNet's founder, who says the deal is not in the best interest of shareholders and the company's board has "run out of ideas."

iiNet

The founder and former CEO of iiNet has criticised TPG's takeover offer for the company in a very public forum, telling shareholders in an investor call to reject the deal.

The call came after TPG last week announced that it was making a AU$1.4 billion offer on iiNet, proposing to acquire 100 percent of the shares it doesn't currently own, for AU$8.60 per share. The deal is subject to approval by the Australian Taxation Office.

In a market update released to investors today, iiNet's directors said they "unanimously" recommended shareholders take up the offer, adding that they "believe it is in the iiNet shareholders' best interests." The directors also announced their intentions to vote in favour of the offer, "in the absence of a superior proposal."

However, the man who started iiNet in his garage and stayed at the helm for more than two decades, Michael Malone, today confronted the current chair of the board to criticise the deal. According to the Australian Financial Review, Malone took chairman Michael Smith to task over how staff and customers would be affected by a takeover.

"My family and I do not believe this deal as it is structured is in the best interests of shareholders, staff or customers," he said. "Indeed, it is appallingly silent on the impact on staff and customers.

"It's not the time to sell, it's a time for change."

Malone went further than criticisms of the deal's structure and the way it has been communicated to shareholders, calling into question the authority of the entire iiNet board.

"I ask that if this deal is defeated, then the current board stand aside," he said. "They have run out of ideas on how to grow this great company. Leave."

The takeover bid has also been met with mixed responses from consumers, who have questioned the effect TPG's ownership of iiNet would have on staff and the broader industry.

Today's comments from the iiNet founder come off the back of a tough week for the ISP, with ZDNet last week revealing that the company's chief financial officer Michael Howard had left after one week in the job.

iiNet has been contacted for comment.