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ihug in Merger Talks with Australia’s iiNet

ihug in Merger Talks with Australia’s iiNet

New Zealand-based Internet Service Provider (ISP), ihug Limited, today acknowledged that it is in discussions with Australian listed ISP, iiNet Limited (ASX: IIN), about a proposed merger and that both companies are currently conducting due diligence.

Over the next two to three weeks the companies hope to agree final terms of the transaction, complete due diligence and resolve other matters. Under the proposal ihug shareholders will receive a mix of cash and iiNet shares as consideration. The proposed transaction will then be subject to regulatory and shareholder approval.

iiNet provides services to approximately 130,000 customers and is one of the top ten ISPs in Australia, while ihug has 150,00 customers. The total customer base of 280,000 subscribers is distributed in almost equal thirds between Western Australia, Eastern Australia and New Zealand. ihug’s 65,000 strong customer base in Australia is located primarily in Sydney, Melbourne and Adelaide. This complements iiNet's strong presence in Western Australia, Tasmania, regional Victoria, Australian Capital Territory and Northern Territory.

About iiNet

Founded in Perth, Western Australia in 1993, iiNet has grown organically and through selective acquisitions to the point where today it has 130,000 subscribers in Australia, up from 72,850 12 months ago. It is the second largest provider of DSL services in Australia. For the 2003 year iiNet generated revenues of $40 million, up 54 percent from the previous year. The Company reported a net profit after tax of $5.2 million and paid an interim dividend of 2 cents per share and a final dividend of a further 4 cents per share.

About ihug

Founded in 1994 privately owned ihug is one of Australasia’s largest Internet Service Providers. The company provides dial up and DSL services to a customer base of 150,000 in New Zealand and the eastern seaboard of Australia and provides internet-based telephony services to a growing number of existing customers. It also furnishes wholesale broadband and satellite access and web services to telecommunications operators and ISPs in both countries. The company has achieved its position from a heritage of continuous innovation, which includes New Zealand’s first flat rate Internet access regime, high-speed satellite access and ihug phone.

ENDS

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