Ann: TPG to Acquire iiNet in a Recommended Transaction, page-48

If the deal goes ahead you will get $8.60 per iinet share in cash, probably in July. You MAY find that the $8.60 is given to you with some franking credits attached (if the ATO approves). So you may get (say) $7.50 cash and $1.10 fully franked dividend. It's still $8.60, paid in cash, but the dividend component will be worth a bit more as it has already had company tax paid on it at 30%.

I can't advise whether its worth buying at $8.50 or not, you have to make your own decisions.