A merger of Sky TV [NZX: SKT] and Vodafone will create significant value for shareholders and create a leading integrated media player, say merger documents released this morning.
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The announcement was made before the opening bell on the New Zealand share market, where Sky traded at NZ$4.47 and Spark, Vodafone’s main competitor, was at NZ$3.485 at the closing bell Wednesday. The shares will resume trading this morning.
The deal would see Vodafone take a 51 percent stake in the combined entity, through a mix of new shares and $1.25 billion in cash.
Pay-TV operator Sky has confirmed it is in merger talks with Vodafone.
According to Sky, the discussions are ongoing and incomplete and may not result in a transaction occurring.
New shares in SKY TV will be issued at $5.40 each.
The structure of the deal is likely to heighten concerns that the merger could disadvantage Sky subscribers who were not customers of Vodafone. The deal requires approval by shareholdings holding more than 75 percent of votes cast at the meeting.
Together the companies will be one of the biggest companies on the NZX, with combined revenue of $2.9 billion for the year to June 2017 on a pro forma basis, and earnings before interest, tax, depreciation and amortisation of $786 million.
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The merged companies are expected to generate cost and capital expenditure savings of about $415 million, or 52 cents per share, after integration costs, as they rationalise overlapping functions and use Vodafone NZ’s technical and network capabilities to improve the efficiency of sales and marketing.
