Internet service provider TPG has made a $1.4 billion play for iiNet, in a move that will see the combined group leapfrog Optus to become the country's second largest broadband provider.
The buyout will create a telco with combined revenues of $2.3 billion.
The deal would see TPG's customer base balloon to 1.7 million subscribers - including iiNet's more than 60,000 NBN and fibre subscribers - "delivering scale benefits in an NBN environment".
TPG said the acquisition would strengthen its national play and "complement [TPG's] existing value-based strategy with a premium, high quality service offering".
The ISP also expects iiNet would give it a vastly expanded reach into the small-to-medium enterprise market. It is already strong in corporate and government, partially as a result of the PIPE Networks and AAPT businesses it previously bought.
iiNet services around 975,000 broadband subscribers with 1.9 million broadband, telephony and IPTV services. It operates more than 450 DSLAMs and employs 2500 staff.
TPG is offering a cash consideration of $8.60 a share, entirely funded by debt. iiNet's 52 week high is $8.50.
The deal values iiNet’s 975,000 subscribers at $1436 a head.
iiNet shareholders wlll vote on the proposal at a meeting in June, though the company's directors were unanimous in supporting the buyout. It is also subject to regulatory approval by the ACCC.
"The ACCC will commence a public review once a submission is received from the merger parties," the regulator said.
"The ACCC will call for comment when the public review commences."
TPG said it will retain the main iiNet brand, but will review others in iiNet's portfolio - such as Adam Internet, Internode and Westnet.
iiNet chairman Michael Smith said the board viewed the offer as a "significant reward" for shareholders who have "shown their faith in iiNet".
"The price of $1.4 billion is a very tangible measure of the value that the extraordinary people of iiNet have created through their innovation, brilliant service and capacity to add value," he said in a statement.
TPG CEO David Teoh said the two businesses were "highly complementary" in terms of geographic presence, market segments and corporate customer base.
TPG reported revenues of $970 million for its fiscal 2014 year and net profit of $171 million.
As at July last year TPG had 748,000 broadband subscribers and 362,000 mobile subscribers.
In contrast, for its last financial year iiNet reported revenues of $547 million and net profit of $32 million.
iiNet also recorded a 25,000 jump in broadband subscribers to push its customer base to 975,000.