Vodafone New Zealand is to take a controlling interest in Sky Network Television Ltd under a NZ$3.44 billion (US$2.44 billion) merger deal, the pay-TV operator said yesterday.
The combination of New Zealand’s largest subscription television service with the nation’s second-biggest telecom is a “transformational strategic step” for the company, Sky said.
“This is a significant and positive step in Sky’s evolution as a premium entertainment company,” Sky Network Television chief executive officer John Fellet said in a statement. “The combined group will offer exciting new packages with Sky’s premium entertainment content, Vodafone NZ’s communications and digital services of the future.”
Shares in Sky — which has no connection with the pan-European broadcaster of the same name — soared 17.45 percent to NZ$5.25 on the announcement, while Vodafone’s main rival, Spark, dropped 5.02 percent to NZ$3.31.
Sky said its board unanimously backed the proposal after an independent assessor concluded it would benefit shareholders.
A Sky shareholders meeting is set to be held early next month, where the deal would need 75 percent approval to proceed.
It would also need the green light from New Zealand’s competition watchdog.
Under the deal, Sky is to buy Vodafone NZ using a combination of shares and NZ$1.25 billion in cash, which it said was “equivalent to enterprise value of NZ$3.44 billion.”
However, Vodafone NZ’s British parent company, Vodafone Group PLC, is to have a 51 percent stake in the combined entity.
Almost half of New Zealand households have Sky subscriptions, due largely to its premium sports content, including All Blacks matches and the Olympics.
However, it has been under increasing pressure recently from services such as Netflix Inc.
Vodafone NZ made a NZ$121 million loss in 2014-2015, but boasts the nation’s most mobile phone connections, providing a prime platform for distributing Sky’s content.
Sky documents submitted to the New Zealand Stock Exchange revealed the combined company would look to bundle telecom and pay-TV packages together.
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