National ISP iiNet has announced the completion of its purchase of competitor Internode, completing the $105 million buyout a month ahead of schedule.

 

Internode managing director Simon Hackett announced the completion of the purchase in a post on Whirlpool, expressing his optimism for the future of the combined business.

 

iiNet CEO Michael Malone praised the conduct of the purchase, saying that “a number of administrative conditions,” had been met, allowing the purchase to move forward.

 

“Thanks to the leadership of Internode managing director Simon Hackett and his team, the transaction has been well received by Internode staff and customers,” Mr Malone said.  

 

"Internode is an attractive acquisition, consistent with our strategy of building scale in anticipation of the national broadband network (NBN) market. Internode's experienced management team and excellent customer satisfaction record will allow iiNet to efficiently grow its presence in the South Australian and Eastern State markets."

 

The purchase will see iiNet acquire:

  • Acquisition of 190,000 broadband subscribers and 260,000 active services
  • Expected pro forma FY12 revenue of approximately $180 million and pro forma FY12 EBITDA of approximately $25 million, prior to synergies
  • Synergies available from on-net migration, bandwidth, backhaul, inter-capital transmission and the integration of systems and suppliers
  • Synergies expected to contribute incremental EBITDA of $7 million realised within FY13
  • $105 million acquisition price represents a 4.2x expected pre-synergies FY12 EBITDA multiple and a 3.3x post-synergies pro forma EBITDA multiple
  • Expected to be EPS accretive in FY13 pre-synergies
  • 15,000 off-net subscribers expected to be migrated to iiNet's network
  • Very strong brand based in South Australia, with customers in all states and territories
  • Experienced management team with deep local relationships
  • Compatible network infrastructure, extending iiNet's DSLAM footprint by over 36 exchanges and requiring only ongoing maintenance capital expenditure

 

The purchase will see Mr Hackett receive an estimated 12 million iiNet shares, with the balance to be paid in cash net of Internode’s existing debt.