ASX-listed ISP, iiNet (ASX: IIN) has acquired Westnet for $81 million. The cash deal is expected to be completed by the end of May.
To fund the acquisition, iiNet raised $41 million through placing 25.6 million ordinary shares in the company. The remainder was funded through a combination of cash and debt.
iiNet CFO, David Buckingham, said Westnet was a good fit because of its strong regional presence.
"We're very strong in terms of infrastructure and network; Westnet is particularly well known for its customer service," he said. "We also like the synergistic benefits. We've got a lot of potential things to look at in terms of making the best use out of our infrastructure and their reseller channel."
Westnet has about 1000 resellers on its books. Buckingham said the combined companies would have 366,000 DSL customers.
Overall iiNet's active services will grow more than 680,000 including more than 470,000 dial-up and broadband subscribers. The combined subscriber base would provide iiNet with 30 per cent market share in WA, Buckingham said.
"Westnet have a significant regional presence in WA and Queensland, whereas iiNet is historically a metro brand covering Perth, Sydney, Melbourne and Brisbane," he said. "They have a very strong regional brand that we don't want to mess with. We want to complement that with our metropolitan experience."
All 500 Westnet staff will be kept on board and the company will continue to run as a separate entity, under its own brand.