Internet company TPG, started by Malaysian couple David and Vicky Teoh, is set to surpass the Singapore-owned Optus as Australia’s second biggest Internet provider with a A$1.4 billion takeover of rival iiNet.

According to an Australian Associated Press ( AAP ) report, the deal would increase TPG’s customer base to 1.7 million, ahead of the 988,000 currently with Optus, and put it behind only Telstra, which has three million customers.

TPG plans to run the two businesses separately, using iiNet to target premium customers who are willing to pay more for greater service and connections, while keeping its core brand as a low-cost alternative.

“Definitely we want to keep the brand, we respect and value the iiNet brand,” TPG’s consumer general manager Craig Levy was quoted by AAP as saying.

The takeover has the backing of iiNet’s board of directors but still needs approval from shareholders and the consumer watchdog.

TPG has offered to pay A$8.60 for each iiNet share, a 33 percent premium above iiNet’s five-day average share price in the lead up to the takeover announcement.

Shares in iiNet jumped A$1.69, or 24.8 percent, to A$8.50 today, while TPG shares climbed A$1.37, or 17.7 percent, to A$9.11.

TPG chief executive David Teoh said the two companies would fit well together.

“iiNet and TPG are highly complementary businesses in terms of geographic presence, market segments and corporate customer base,” Teoh told AAP .

- Bernama