After the announcement of TPG’s $1.4bn takeover of iiNet some shareholders are speaking out against the deal. With a 5.7 per cent stake in iiNet, BT Investment Management is the largest institutional shareholder. Paul Hanna, the head of smaller companies for BT Investment, said the company was “disappointed” and has “major reservations” about the buy-out package. “The prize of significant synergies needs to be shared with iiNet shareholders; the current bid does not reflect that," he said. "We are staggered the board and its advisers doesn't see this and didn't argue stronger for a scrip-based alternative. To have dealt these strategic assets for a bog standard 25 per cent premium is absurd.” Another major and anonymous investor was quoted as saying “the price is a bit light.”
As shareholders speak out against the deal, it has become clear that they were unaware of the details of the buy-out package. Andrew Abercrombie, a top individual shareholder, said the board of directors ignored him for over a year whenever he tried to learn more details about the package. iiNet chairman Michael Smith confirmed that they had not been communicating with shareholders enough. “If I was a major shareholder and hadn't been contacted I'd think it was fair criticism. We've been focusing on the prosecution of what's in front of us.”
In addition to the lack of transparency and communication of the board, shareholders are also disappointed at the lackluster features of the deal. One condition of the transaction is that iiNet is disallowed to recommend another offer without triggering a $14m break fee. There is also no tax rollover relief for shareholders. Investors are also concerned about the pricing of the deal. Simon Hackett, NBN Co director, is a significant shareholder and said he would reject the deal despite the near market value price tag. As this deal moves forward, the buy-out decision will ultimately be up to the shareholders.