TPG's acquisition of iiNet gets green light from ACCC

ACCC will not oppose takeover

Australia's competition regulator will not oppose TPG's acquisition of iiNet.

The Australian Competition and Consumer Commission announced its decision this morning.

The ACCC said that although it was concerned that the acquisition of iiNet would reduce competition in the retail fixed broadband market, its investigation concluded that it would not be a "substantial" lessening of competition, which is required for the watchdog to take action under section 50 of the Competition and Consumer Act.

The decision marks a shift from the ACCC's preliminary view and comes despite a majority of submissions to the review of the merger opposing the deal.

"The ACCC’s preliminary view is that the acquisition of iiNet may lead to a substantial lessening of competition, potentially resulting in higher prices and/or degradation of the non-price offers available in the market, including customer service," said a statement of issues released in June by the organisation.

The ACCC is yet to release its Public Competition Assessment of the merger.

Competition from Telstra, Optus and M2 is likely to limit any negative impact on the market, the ACCC said today.

However it will lead to a more consolidated market, the organisation said.

"Any future merger between two of the remaining four large suppliers of fixed broadband is likely to raise serious competition concerns," ACCC chairperson Rod Sims said in a statement.

The acquisition will make TPG the number two broadband provider in Australia by subscriber numbers with more than 1.7 million broadband customers and combined revenues of $2.3 billion and EBITDA of $654 million.

The takeover bid last month received the overwhelming endorsement by iiNet shareholders .

The deal was backed by 89.93 per cent of iiNet shareholders present and voting (either in person or by proxy) at a meeting held to consider the bid.

An overwhelming 95.09 per cent of votes cast backed the TPG offer of either $8.80 cash or 0.5533 TPG shares plus $3.77 cash for each iiNet share, as well as a discretionary special dividend of up to $0.75 per share (or a top-up cash payment if it is less than $0.75).

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