iiNet inks another buy for $60m

05/08/2013 - 08:14

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Internet service provider iiNet has continued its growth through acquisition strategy with a deal inked to purchase South Australian-based Adam Internet.

iiNet inks another buy for $60m

Internet service provider iiNet has continued its growth through acquisition strategy with a deal inked to purchase South Australian-based Adam Internet.

The $60 million acquisition will see another 70,000 broadband customers added to iiNet’s customer base, which is now around 900,000.

Such figures make it Australia’s second largest broadband provider behind Telstra, which has 2.6 million DSL subscribers. Telstra had put a bid in to buy Adam Internet for the same price, but failed to receive a tick of approval from the Australian Competition and Consumer Commission by the June 30 deadline.

The incorporation of Adam into iiNet’s business is expected to bolster revenue by $55 million in the 2014 financial year, and add $11.5 million in earnings before interest, taxes, depreciation and amortisation.

The acquisition also includes ownership of bandwidth and backhaul infrastructure - reducing iiNet’s need for capital expenditure on infrastructure.

The deal to buy Adam Internet comes 20 months after iiNet bought another South Australian internet provider Internode.

That transaction, in December 2011, added 190,000 broadband subscribers to iiNet’s books for a price of $105 million.

iiNet also bought Canberra-based telecommunications company TransACT at around the same time for $60 million, which gave iiNet an additional 40,000 customers.

Less than a year earlier iiNet bought AAPT Consumer Division from Telecom New Zealand, which added 113,000 broadband customers.

iiNet chief executive Michael Malone said the acquisition reinforced the company’s position as the second largest DSL internet service provider and leading challenger in the telecommunications market.

“This acquisition further builds on our strategy to grow scale in the national residential and business broadband segments,” Mr Malone said.

The company said the Australian Competition and Consumer Commission had already cleared the way for the acquisition, which is subject to standard procedural conditions that are expected to be met by August 31.

iiNet was advised by Azure Capital with legal advice from K&L Gates and Herbert Greer.

Most recent deals:

December 2011 $105 million Internode acquisition, advised by Azure Capital and Middletons (Ernst & Young was independent expert)

December 2011 $60 million TransACT acquisition, advised by Azure Capital, Deloitte Middletons, Clayton Utz (Ernst & Young was independent expert)

 

 

 

 

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