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Spark stays firm on TeamTalk deal – 80c or nothing and forget Vodafone

04 Apr 17

Spark New Zealand today released a statement to affirm their position in their attempted acquisition of TeamTalk.

Essentially, Spark is today affirming that:

  • Its offer price for 100% of TeamTalk’s ordinary shares remains at 80 cents per share. This price is full and final for this offer;
  • It has waived the condition requiring 90% shareholder acceptance, meaning Spark’s offer will become unconditional as to the level of acceptances upon achieving more than 50% shareholder acceptance;
  • In the event that TeamTalk shareholders vote to approve the proposal to sell a 70% share of the Farmside subsidiary to Vodafone at the Special Meeting on April 12th, Spark will not waive the conditions of its offer that would be breached, and Spark’s offer will lapse.

However, TeamTalk and Grant Samuel & Associates Ltd, the independent adviser, released a statement to NZX that reported on the ‘merits’ of the Spark offer and an independent assessment value.

“The underlying value of TeamTalk’s shares is in the range of $1.52 to $2.11 per share”, and that “as the Spark Offer of 80 cents per share is below Grant Samuel’s assessed value range for TeamTalk’s shares there is no compelling reason to accept the Offer,” the report says.

TeamTalk chairman, Roger Sowry says  Spark’s offer is without merit and not in the interests of TeamTalk shareholders.

“It is an attempt to gain control of TeamTalk’s strategic assets for significantly less than the company’s fair value,” Sowry says.

“TeamTalk’s Directors unanimously recommend that shareholders reject Spark’s offer in respect of all their TeamTalk shares.”

Spark’s chief financial officer, David Chalmers says they have taken time to consider the Target Statement and Independent Adviser reports provided to shareholders.

“As New Zealand’s largest digital services company, Spark has a strong insight into industry dynamics, and what the future shape of communication networks may be,” Chalmers says.

“We do not believe Grant Samuel’s report adequately accounts for the market risks to the CityLink and TeamTalk Mobile Radio businesses over coming years.”

Chalmers says Spark needs to be disciplined in how they invest their shareholder’s capital.

“We will not pay a significant premium for an unsubstantiated forecast that is light on detail and in our view is unlikely to be achieved,” says Chalmers.

“Our offer represents a premium of 78% over the last closing price before Spark issued its Notice of Intention, while the Independent Adviser believes that, at the mid-point of the range, the shares are worth more than four times the pre-Notice price.”

Chalmers says TeamTalk shareholders should carefully consider whether they prefer a clear exit path with Spark’s offer, or to continue as an investor in TeamTalk and rely upon the Board and Management to deliver the turnaround they’ve talked about.

And then of course, there is the Vodafone deal with Farmside, a branch of TeamTalk.

According to Spark, in the event shareholders vote to approve the Farmside transaction, Spark’s offer will lapse and shareholders will no longer be able to accept the offer. Spark would then seek alternative options to CityLink to achieve their Wellington metro fibre objectives.

And if it does all go pear-shaped, Spark has expressed well wishes to TeamTalk’s board, management and shareholders.

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