Sky Network Ltd and Vodafone Group Plc announced a deal on June 9 under which Sky and Vodafone’s New Zealand unit would merge.
Under terms of the deal outlined in a joint press release, Sky would acquire all of the shares in Vodafone NZ for a total purchase price of NZ$3.437 billion ($2.44 billion) through the issue of new Sky shares, giving Vodafone Europe B.V. a 51 per cent interest in the combined group and cash consideration of NZ$1.25 billion, to be funded through new debt.
The new Sky shares will be issued at NZ$5.40 per share, representing a 21 percent premium to Sky’s last close.
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Sky’s shares jumped 20 per cent on the news at June 9’s open, bringing them to NZ$5.35. “It’s a very big deal for Sky TV and the market is going to take some time to digest it and work through the impact,” said Forsyth Barr Investment Adviser Adrian Vance. He noted that Spark is under some pressure, down 6.7 per cent on the uncertainty of the impact of this combined company.
Vodafone NZ has more than 2.35 million mobile connections and more than 500,000 fixed-line connections in New Zealand. Sky is New Zealand’s leading pay TV provider with over 830,000 subscribers.
The combined group will be one of the largest companies listed on the New Zealand stock exchange and will have forecast pro-forma revenue of NZ$2.9 billion.
The deal must be approved by Sky shareholders. A meeting is expected to take place in early July. ($1 = 1.4106 New Zealand dollars)