MARKET RELEASE
9 March 2017
Spark New Zealand launches formal takeover offer of NZ$0.80 per share to
TeamTalk shareholders
Spark New Zealand confirmed today it is making a formal offer to TeamTalk
shareholders to acquire 100% of their TeamTalk shares at a price of NZ$0.80
per share.
Spark''s Chief Financial Officer, David Chalmers, said, "We strongly believe
this offer is in the best interests of TeamTalk shareholders, many of whom
have seen the value of their investment in TeamTalk relentlessly decline over
recent years.
"This offer allows TeamTalk shareholders to achieve a price for their shares
that is 78% higher than the last closing price before Spark issued its Notice
of Intention, and an 82% premium on a three-month volume weighted average
price basis. This is one of the highest premiums over the pre-offer market
price for any Code takeover on the NZX in at least the last decade.
"So we are somewhat surprised that, given extensive efforts to engage in good
faith with the TeamTalk Board, they have been dismissive of Spark''s interest
and the opportunity to unlock value for their shareholders. TeamTalk agreed
to provide Spark with limited due diligence, but much of the information that
was requested was never delivered and what was provided was of little
substance.
"The TeamTalk Board has suggested there may be significant value in the
business above Spark''s offer price, based on the promise of a new strategic
business plan. We have yet to see any concrete evidence of such a plan, or
receive a summary or copy of it from the TeamTalk Board.
We also note no other proposals for a partial or full sale of TeamTalk have
been put to shareholders at any time in the nine months Spark has been
attempting to engage with TeamTalk, and there is no sign that any such offers
will eventuate.
"Spark''s offer provides significantly greater and more immediate certainty
than the alternatives advocated by the TeamTalk Board, such as holding shares
in the belief that performance may significantly improve, or a series of
possible sales based on a potential break-up of TeamTalk assets.
"The New Zealand telecommunications market continues to change rapidly, and
as a result TeamTalk faces many headwinds. In particular, the UFB network has
created pressure for the owners of competing fibre, including CityLink, which
also needs to invest significant sums to underground portions of its
Wellington fibre due to the retirement of the trolley-bus network.
"Farmside is competing in an intensely competitive broadband market, and the
extension of rural communication networks has reduced the market for niche
satellite services. The increasing coverage and performance of mobile
networks is also challenging the role of mobile radio networks, a core
element of TeamTalk''s business.
"For TeamTalk, the cumulative impact of these challenges has resulted in a
series of earnings downgrades as margins have come under increasing pressure.
This was highlighted in TeamTalk''s first half result for FY17. Despite
attempts to characterise the result as pleasing, revenue and underlying net
profits before tax were down on the first half result for FY16. The TeamTalk
Board has also indicated the need to fund significant capital requirements
across TeamTalk in the coming years at a time when the company''s debt
facilities are being reduced.
"With all these factors in mind, we simply do not believe TeamTalk can
deliver a better outcome for its shareholders than Spark''s offer."
The full details of the Spark offer are available at investors.sparknz.co.nz
- ENDS -
For media queries, please contact:
Richard Llewellyn
Head of Corporate Communications +64 (0) 27 523 2362
For investor relations queries, please contact:
Dean Werder
General Manager Finance and Business Performance +64 (0) 27 259 7176
End CA:00298019 For:SPK Type:TAKEOVER Time:2017-03-09 08:44:39