TPG has upped its bid for iiNet to $1.56 billion and offered shareholders a choice of shares or cash, gaining the iiNet board's support over that of rival M2.
Today iiNet announced TPG had now offered $9.55 per iiNet share, including a $0.75 special dividend.
Shareholders can choose between cash or scrip, excluding the special dividend which is to be paid in cash. TPG has capped its share offering at 27.5 million TPG shares.
iiNet chairman Michael Smith said the value and certainty offered by TPG's scrip alternative outweighed the M2 proposal.
TPG's part-cash offer was preferable to the uncertain future value of the all-scrip M2 bid, iiNet's board said.
M2's offer was worth $1.6 billion at the time it submitted the proposal, but the all-scrip nature means the dollar value fluctuates with M2's share price. It is worth around $1.57 billion at the time of writing.
M2 had taken heed of feedback to TPG's initial offer in crafting its own bid, specifically around the all-cash nature of the TPG proposal (which shareholders were concerned would restrict iiNet from profiting from the merged entity's future growth) and uncertainty around the future of the iiNet brand under a TPG rule.
M2 said at the time said it would withdraw its offer should iiNet not enter a scheme implementation deed by the end of today.
iiNet said it would not sign a deed given its approval of the new TPG offer, meaning M2's bid would likely be withdrawn.
A TPG-iiNet merger will create Australia's second largest broadband provider behind Telstra.