UPDATED: iiNet has announced that it will acquire Internode and its associated companies for $105 million. The buyout will mean that the company, according to iiNet’s CEO Michael Malone, make iiNet “the new number 2 provider” of DSL broadband.
The company surprised investors when it announced the deal.
The buyout will allow iiNet to expand and grow its current position in South Australia, adding 260,000 active internet and phone subscribers to its own network. The deal will also mean that iiNet’s own network will expand to 36 more DSLAMs.
Internode, however, will remain a separate unit of the company and retaining its existing brand and corporate structure.
“Internode is an attractive acquisition, consistent with our strategy of building scale in anticipation of the national broadband network (NBN) market. Internode’s experienced management team and excellent customer satisfaction record will allow iiNet to efficiently grow its presence in the South Australian and Eastern State markets,” Malone said.
“Internode is a successful company with an impressive reputation.”
Simon Hackett, the CEO of Internode, will get 12 million shares of iiNet. In addition, he’s agreed to not acquire more shares for the next 12 months.
“We believe the best interests of Internode’s customers, employees and shareholders are served by joining forces with a corporately and culturally aligned business such as iiNet,” Hackett said in a statement. “There’s great synergy between iiNet and Internode.”
The deal is expected to be completed by the end of February.
iiNet has been on a recent spending spree after buying TransACT to expand its network in the ACT, and Netspace in Victoria back in 2010 – all in order to maybe shore up its network. Rival ISP TPG has also acquired a substantial stake (7.24 percent) in the company, with many asking if TPG will acquire the company in the future or is this simply a strategic maneuver.