iiNet stays course amid merger skirmish
Just like the wrecking ball smashing down the old Ace Cinemas outside David Buckingham’s Subiaco office, the iiNet chief executive admits the past few months have been a bit of a distraction.
iiNet, arguably one of the most recognisable brands in the country, has been the ping-pong ball in a vicious billion-dollar contest between two rival suit-ors — TPG and M2 Group, which is behind the Dodo brand.
For shareholders, it is the stuff dreams are made of.
But for most of iiNet’s 2500 workforce, including Mr Buckingham, it is a situation that — from an outsider’s perspective at least — breeds uncertainty.
“It has been a distraction,” Mr Buckingham toldWestBusiness .
“Most deals like this are done in complete privacy and secrecy, and announcements are made and change management kicks in and you can get on with handling the staff. This is an open process because of the way it has been formed.
“It’s not easy when you don’t know the endgame. And clearly there are always concerns.
“But you’ve got to remember, a lot of our staff have been bought themselves ... and they’ve gone through this sort of uncomfortable, uncertain feeling.
“But I’ll be honest with you, I’ve been amazed with the staff reaction. It’s not easy ... and they’re really resilient.”
Mr Buckingham has, in many ways, over the past few months been like the driver of a bus with no set route, running iiNet with reclusive billionaire David Teoh on the other side of the country — or M2, for that matter — poised to determine the future of the internet services provider.
TPG’s $1.6 billion, $9.55-a-share counter-offer for the company is being considered by an independent expert. The result is expected within a fortnight.
The M2 board is set to meet today, with insiders suggesting that if the expert sides with TPG — which sources suggest will almost certainly be the case — M2 will not lodge a counter-bid and will instead hope shareholders vote down the deal.
There was also speculation last week that M2’s corporate adviser, Goldman Sachs, has been actively canvassing iiNet institutional shareholders on their voting intentions, suggest-ing they should vote down TPG’s bid. It’s an indication M2 may offer a sweetener to its original bid because it does not want to get into a bidding war with TPG.
Of course, if TPG’s offer is voted down there is nothing stopping Mr Teoh building a blocking stake, just as he did with the proposed Amcom and Vocus Communications merger.
In the meantime, Mr Buckingham still has a company to run, and he said it was “doing nothing differently”.
“We’re running the business as iiNet, that’s our sole focus,” he said. “We’ve got the NBN roll-out which, I have to say, is credible now,” he added, referring to the problems iiNet has had with NBN contractors.
Despite perceived concerns over the takeover — and the uncertainty over his own position — he was looking ahead.
“I’m looking forward to where the brand is part of a bigger organisation with more scale, more infrastructure, buy and render infrastructure — synergies if you want — for it to play with,” he said.
“Whatever happens, a force to reckoned with is going to be built, compared to number one or number two in the market.”
Mr Buckingham was coy on whether he agreed with the company’s former chief regulatory officer Steve Dalby, who believed iiNet needed to merge to compete against the likes of Telstra.
“The facts speak for themselves,” he said. “Telstra has the market share. More than 50 per cent in most markets and (it’s) making more profits than the rest of the sector combined.
“We are fighting a 3800-pound gorilla, not a 800-pound gorilla. And clearly, if you look at the history of iiNet, our ability to compete has improved on the back of the acquisitions we have picked up. We have national scale now, national brands operate on a national basis and levels of profitability that have never been higher.”
