iiNet has announced in a somewhat surprise move yesterday that it will acquire South Australian-based Internet Service Provider (ISP) Internode for $105 million, just 3 days before Christmas.
In a statement first posted to the Australian Stock Exchange (ASX), iiNet told investors that it felt Internode was “a very attractive” strategic acquisition that will consolidate and propel iiNet to second position in the Internet Service Provider (ISP) race against Telstra’s BigPond arm by providing an additional 260,000 active customers. Of these, around 190,000 are broadband subscribers.
“The two companies are clearly a good fit with their strong cultural alignment, industry-leading customer service and shared commitment to innovation,” iiNet Chief Executive Officer, Michael Malone, said in a statement yesterday.
Internode CEO Simon Hackett welcomed the acquisition, saying “there’s great synergy between iiNet and Internode. iiNet operates in complementary geographic areas, it maintains compatible technologies and it has a strong cultural fit, in terms of caring for customers.”
In what is being labelled a win for both companies in the lead up to the ramp-out of Australia’s National Broadband Network (NBN), widening iiNet’s customer base and allowing it a greater scale.
Malone confirmed Internode CEO Simon Hackett will be paid with approximately 12 million iiNet shares, with the remaining payments to be funded using cash on hand as well as via iiNet’s debt facilities in February 2012, the company says.
For now, it’s business as usual at Internode with the company to remain a separate business unit within iiNet. Hackett will remain responsible for the Internode division, with most of his management team expected to stay on despite the acquisition.
Network equipment will be integrated with iiNet’s over time – Internode’s 202 DSLAMs in exchanges across Australia will compliment iiNet’s – while customers will remain on the Internode brand and be provided with Internode-labelled services for now.
However the deal remains subject to a number of “procedural conditions”, iiNet says, that it expects will be completed by the 29th February, 2012.