iiNet shareholders have voted in favour of a deal to bring the Internet service provider under the ownership of rival provider TPG, in a deal worth AU$1.56 billion.
Shareholders offered their overwhelming support for the deal at a meeting in Perth today, with 95.09 percent voting in favour of a takeover.
As Australia's fourth-largest ISP, TPG previously held a stake in iiNet, which currently ranks second in the Australian market. However, following today's vote to allow a 100 percent buyout, TPG is set to become a major player with the two providers claiming a reported combined customer base of over 1.7 million.
While the deal is still subject to approval from the Australian Competition and Consumer Commission, the full takeover is set to be implemented by September 7, with iiNet to be delisted from the Australian Securities Exchange.
In an address to shareholders before the vote today, iiNet chairperson Michael Smith said it was a "significant day in the proud history of iiNet" and the deal showed just how "strategically valuable" the ISP remained in the Australian industry.
Smith also alluded to the changing landscape of the Australian telecommunications space, saying the industry was moving towards "inevitable consolidation" but that the iiNet would continue to play a part.
was first announced on the ASX in March, with TPG offering AU$8.60 per share for 100 percent of iiNET shares, valuing the company at AU$1.4 billion.
What followed was something of a bidding war as M2 Group, the parent company of ISPs Dodo and iPrimus,. M2 upped the bid, offering iiNet shareholders M2 shares and a AU$0.75 cash dividend to the value of AU$11.37 per iiNet share, pumping up the value of the takeover deal to AU$2.25 billion.
Not to be outdone,offering AU$9.55 per iiNet share, including AU$8.80 in cash or the equivalent value in TPG shares, as well as the same AU$0.75 dividend. The iiNet board recommended this "more favourable" offer to its shareholders, and M2 subsequently withdrew its bid.
The TPG buyout has not been without controversy. iiNet co-founder and ex-CEO, using an investor call to tell shareholders to reject the offer.
"My family and I do not believe this deal as it is structured is in the best interests of shareholders, staff or customers," Malone said. "Indeed, it is appallingly silent on the impact on staff and customers."
Malone went even further, suggesting that if shareholder did reject the buyout, then the current iiNet board of director should "stand aside."
The ACCC also, warning that a TPG acquisition of iiNet could lead to increase service costs for consumers, a reduction in customer service and a "substantial lessening of competition." At the time ACCC chairperson Rod Sims said the watchdog had "received a number of submissions from consumers" that were concerned that "iiNet's customer service levels [would] decline" under TPG ownership.
Despite this, iiNet has argued that it is the "the best piece of fruit in the bowl" and a new owner would be foolish to squander the company's good standing after a buyout.
"It's like Volkswagen buying Porsche," said iiNet chair Michael Smith. "If you tried to turn Porsche, having acquired it, into a Volkswagen, you would destroy the value that goes with that brand. If TPG didn't run iiNet like it has been run...they're placing at risk the amount of money that they've paid."
Final approval of today's vote is expected from the ACCC on August 20, with iiNet expected to seek Federal Court approval the following day.