East Perth-based internet and telecommunications provider iiNet has returned to its acquisition strategy after a more than two-year layover, acquiring fellow Western Australian player Westnet for an $81 million cash payment.
To fund the deal, iiNet raised almost $42 million was raised through the placement of 25.6 million ordinary shares at $1.60 per share, while the remainder was raised via cash and debt.
Big iiNet shareholder Amcom, with a 22.4 per cent holding, contributed $9.2 million, accepting 5.7 million shares at $1.60 each.
This brings Amcom's total investment in the company to $35.5 million, having come in board two years ago as iiNet struggled to overcome huge issues relating to its previous takeover of Ozemail which exacerbated internal reporting and management issues - forcing a month-long trading halt in its shares and impacting heavily on its value.
With that saga behind it and after a year of consolidation, iiNet has pounced on its biggest independent rival in the neighbouring Westnet.
iiNet said the deal reinforces its position as the third largest internet service provider in Australia.
iiNet said the price was at a multiple of 6.8 times EBITDA before synergies were realised, or 4.3 times if synergies were included.
"Both Westnet and iiNet have always focused on genuine plain speaking customer service, seeing that as the only really sustainable differentiator in our business," iiNet Managing Director Michael Malone said in the statement.
Founded in Geraldton by Peter Brown, Westnet will bring across 215,000 active services, raising iiNet's total to over 680,000.
Dialup and broadband subscribers of iiNet will grow to 470,000 through the acquisition.
Half of the combined entities' revenues comes from WA.
iiNet, which will retain the Westnet brand and staff, said the companies were particularly strong in Western Australia, and the combined subscriber base would be over 30 per cent of WA's market.
"This opportunity allows the company to continue that same level of customer service and also offer many new products to our agents and customers," Westnet managing director Peter Brown said.
Both Mr Malone and Mr Brown are previous WA Business News 40under40 Awards winners.
