iiNet board slammed for TPG takeover deal

iiNet founder and former CEO Michael Malone is one of a number of shareholders who have raised concerns about the AU$1.4 billion takeover offer from TPG.

Internet provider iiNet is facing opposition from some shareholders and staff to its $1.4 billion takeover by rival TPG.

But iiNet's executives are standing firm, adamant that the takeover will not hurt customers or employees, and is in the best interests of shareholders.

The company's founder and former chief executive Michael Malone, who remains a shareholder, has criticised the lack of information provided to customers and staff about how they will be affected by new owners.

Malone reportedly said that the board had "run out of ideas".

Chairman Michael Smith briefed investors on the deal on Monday, 10 days after the AU$1.4 billion takeover was announced, and said he "seriously contested" Malone's claim.

He said the delay in providing more information to shareholders was due to the importance of speaking personally with customers and staff immediately.

"We will do everything we can, on the basis that this deal proceeds, to ensure that it remains great for staff and great for customers," Smith told reporters.

iiNet's investors had indicated a great deal of support for the takeover, which would go to a shareholder vote in June, he added.

"We hear voices from both sides. I think most of what we have heard is positive," Smith said.

"Even people who have criticised the deal and who are close to us have said the price is a good price.

"The comments that some shareholders are making ... go to the fact they are worried about the future of [the] company more than they go to price."

But the chairman indicated that there is serious concern in iiNet that the low-cost, media-shy attitude of TPG could seep into iiNet culture, which has always been focused on customer service and customer advocacy.

"Whatever we might like to think, there's clearly some risk about this, regardless of who the purchaser is. I would think that we all are seriously concerned," he said.

"I can't pretend for a moment that we're not seriously concerned about it, as anyone in a business would."

iiNet CEO David Buckingham said that TPG paid a premium for iiNet for its approach to customer service.

"TPG is paying a large premium to acquire that special value; they're not going to run it into the ground. TPG plus iiNet will create a significant market player that will no doubt be able to offer significant advantages to our customers," he said.

He said that iiNet's culture had been fostered to be open over many years, and staff that had come into the company through acquisition had been through a takeover process before.

Last week, ZDNet broke the news that the company's chief financial officer, Michael Howard, left after just one week in the job, shortly after the announcement of the takeover bid from TPG.

Buckingham refused to confirm if Howard's departure was related to the takeover bid, or whether other executives would leave as a result of the takeover.

"Nobody has threatened to depart. The team is very focused on making sure staff are continuing to do what they do best -- looking after our customers. We are getting on with life," he said.

"I'm very pleased we were able to deal with the CFO in question as we did. We managed to get an open door back into his old environment, and we're working to get him back in there as quickly as possible."

The takeover needs the support of at least 75 percent of all shareholders, and 50 percent of shareholder headcount to proceed.

The bid isn't closed to alternative offers from other bidders such as M2 or Optus. There is no penalty if there is a counter-offer, but if the iiNet directors change their advice to shareholders to vote against the deal, TPG will pick up AU$14 million in compensation.

With AAP

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