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TPG to buy iiNet in AU$1.4B deal

Australia's fourth largest ISP is set to buy out the second biggest, in a share deal worth a cool AU$1.4 billion.

Australian ISP TPG is set to buy out rival iiNet in a deal worth AU$1.4 billion.

Announced on the Australian Securities Exchange, the recommended transaction will see TPG procure 100 percent of iiNet shares, with iiNet shareholders receiving a cash consideration of AU$8.60 per share. That price puts the value of iiNet's equity at AU$1.4 billion.

The ASX announcement dates the full implementation of the transaction at mid July this year.

TPG is currently the fourth largest ISP in Australia and the largest mobile virtual network operator. iiNet is currently ranked second and the combined customer base of the two is estimated at over 1.7 million.

In a statement, the Australian Competition and Consumer Commission said it was aware of the proposed transaction and would review it before the deal was finalised.

"The ACCC will commence a public review after receiving a submission from the parties," it said. "We will call for submissions at that time and details will be posted on our public register."

As the government body overseeing mergers and acquisitions, the ACCC is responsible for ensuring deals such as the TPG-iiNet buyout do not have the effect of "substantially lessening competition in a market".

iiNet has a favourable reputation amongst Australian internet users, often perceived as being willing to go to battle to protect its subscribers. The service provider is currently in court with the rights holders of the film "Dallas Buyers Club" after refusing to hand over the details of customers suspected of illegally downloading the film.

In 2010, iiNet won a landmark Australian piracy case, with the Federal Court finding that the ISP could not be held responsible for any copyright infringement made by its customers. The decision was upheld under appeal in 2012.

Conversely, TPG has maintained a practice in the past of passing on copyright infringement notices from rights holders to customers.

TPG currently has around 1,400 employees, while iiNet has roughly 2,000. It is unknown what impact the deal will have on iiNet employees and customers at this time.

Updated at 10:10 a.m. AEDT: Included comments from the ACCC.