Primus Telecom has been bought by business telco M2 Telecommunications for $192.4 million in cash.

M2 chief executive Geoff Horth said the acquisition would ensure the company is prepared for opportunities presented by the roll out of the national broadband network (NBN).

“The combined group will benefit from the strengths that each entity brings, reinforcing M2’s position as the leading challenger in the small to medium business market,” Mr Horth said in a statement.

To fund part of the purchase, M2 will conduct an $83.1 million capital raising, offering shareholders one new M2 share for every four they currently hold.

The new shares will be sold for $2.66, a 24 per cent discount on the last closing price of M2 shares.

M2 was established in 1999 and retails under the Commander and Southern Cross Telco brands in Australia.

Primus was one of the first telecommunications companies granted a licence the industry was deregulated in 1997.

It offers residential and business broadband, telephone, and mobile services, and has about 165,000 customers.

The takeover is expected to be finalised by June 1.