Announcing Datafast's decision late yesterday, the company's chief executive, Simon Ehrenfeld, said the due diligence process conducted before the merger revealed the deal would not serve shareholders' interests.
The merger would have created Australian's fifth-largest ISP with 275,000 accounts, of which a mere 28,000 were broadband-based.
Chariot subsequently announced this morning it had acquired Melbourne-based ISP Alphalink in a deal worth AU$6.5 million.
In a statement, Chariot said while the acquisition had been pending since December last year, it had been unable to complete the purchase due to the terms of the Datafast merger.
The purchase will add 30,000 customers to Chariot's roster, bringing it to a total of 180,000.
Chariot chief executive Robert Horlin-Smith made it clear the purchase would not be the ISP's last -- with similar sentiments expressed by Datafast's Ehrenfeld regarding his company.
"We are hungry for further ISP acquisitions, particularly along the eastern seaboard, and currently have several such opportunities undergoing due diligence," said Horlin-Smith.
"Alphalink is, however, one of the last medium-sized ISPs available in the market," he added.
The statement noted Chariot had acquired 11 ISPs in the past 18 months and claimed the company had now grown to become Australia's eighth-largest ISP.
The news comes as Perth ISP Amcom announced on Tuesday it would acquire city compatriot Arachnet. The move will add 5,200 DSL customers to Amcom's existing 2,300, as well as 2,100 new dialup customers.
Business-focused Amcom noted the AU$1.6 million acquisition was particularly suitable as Arachnet's customer base contained a high number of small to medium enterprises located around Amcom's ADSL and optical fibre infrastructure.
