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TPG pips M2 in iiNet battle

UPDATE 2.55pm: TPG Telecom has regained the lead in the bidding war for iiNet, with the Perth-based ISP recommending shareholders accept its revised, sweetened offer worth $1.57 billion.

TPG has upped its bid for iiNet by 11 per cent from $8.60 a share to $9.55, comprising $8.80 in cash along with a 75 cent fully franked special dividend. The company has also offered a scrip alternative of 0.969 TPG shares for each iiNet share, plus the 75 cent dividend.

iiNet board has deemed TPG's revised offer superior to that of M2 Group, which has offered $9.25 worth of M2 stock for every iiNet share own, plus a special dividend of 75 cents.

iiNet chairman Michael Smith said the certainty of value and the flexibility offered by the scrip alternative in the revised TPG offer was compelling when evaluated against the M2 proposal.

“The board has weighed up both offers and given careful consideration to the merits of a primarily cash-based offer, to one which predominantly comprised scrip," he said.

"We believe the revised cash offer of $9.55 from TPG is favourable to M2’s predominantly scrip offer.

"iiNet shareholders may also roll over into TPG scrip instead should they wish to do so, subject to the cap on the total number of TPG shares."

Implementation of the revised TPG offer will be via an amended scheme implementation agreement with TPG.

The iiNet board has recommended all shareholders vote in favour of the revised TPG offer at the planned
scheme meeting, in the absence of a superior proposal and subject to an independent expert concluding that the TPG scheme is in the best interests of iiNet shareholders.

"Each director intends to vote the iiNet shares they hold or control in favour of the revised TPG offer, in the absence of a superior proposal," iiNet said in a statement

iiNet shareholders will now be waiting to see whether M2 lifts its original bid to match or exceed TPG's revised offer.

iiNet shares were off 28 cents, or 2.8 per cent, to $9.72 at the close while TPG shares were up 37 cents, or 4.21 per cent, to $9.16. M2 shares were off one cent to $11.10.