Vodafone NZ one-ups Spark with 70 percent acquisition in TeamTalk’s Farmside
Vodafone New Zealand and TeamTalk recently announced an agreement.
The deal will see Vodafone NZ acquire 70 percent of the shares in BayCity Communications for $10 million in cash, which (in addition to its wholly owned subsidiaries) owns and operates TeamTalk’s rural broadband and satellite business.
TeamTalk is able to sell its remaining 30 percent to Vodafone NZ for $3 million at any time over the next three years by way of a put option – Vodafone NZ will also hold a call option to enable them to acquire the remaining 30 percent of the shares in Farmside for the same price in certain circumstances.
Despite the acquisition, the companies assert it will be business as usual with TeamTalk continuing to manage Farmside under a management contract, while the transaction will build on the relationship between the two and open the door for synergies beyond Farmside.
TeamTalk chief executive, Andrew Miller says the deal will bring positive change to the company.
"For TeamTalk, this transaction will enable a substantial reduction in debt, provides a clear path forward for Farmside, and further assists TeamTalk to consider the resumption of dividends to shareholders in calendar year 2018,” says Miller.
"The Independent Adviser’s Report which was released on 23 March 2017 as part of TeamTalk’s Target Company Statement valued Farmside in the range of NZ$9.6 million to NZ$12.0 million. The proposed transaction values Farmside at $13.0 million".
Vodafone NZ chief executive, Russel Stanners says the deal will open a lot of doors for the company.
"This is an opportunity to deliver better outcomes for rural customers, to increase our presence in the rural broadband market and to utilise the skillsets of the two complementary companies,” Stanners says.
"The proposed investment by Vodafone in Farmside further deepens the strategic relationship between ourselves and TeamTalk. There are other opportunities for us to partner, for instance sharing fibre including future upgrade and maintenance costs".
While the transaction is subject to approval by TeamTalk shareholders, the board has made the endorsement, with TeamTalk’s chairman, Roger Sowry affirming the announcement providers further validation of the strategic nature of TeamTalk’s assets and the Board’s recommendation that shareholders reject Spark’s offer of 80 cents per TeamTalk share.
"The Farmside transaction comes on top of the company’s strategy re-set and transformation programme that saw a return to profitability in the six months ending 31 December 2016,” says Sowry.
“It further demonstrates that TeamTalk’s executive team, led by Chief Executive Andrew Miller, are successfully implementing the turnaround strategy to realise the company’s inherent potential and to maximise shareholder value."