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Vodafone in $2.44 billion merger deal

International Business
Fri, 10 Jun 2016

Wellington: Vodafone New Zealand will take a controlling interest in Sky Network Television under a 3.44 billion New Zealand dollars ($2.44bn) merger deal, the pay-TV operator said.

The combination of New Zealand’s largest subscription television service with the country’s second biggest telecoms carrier was 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,” chief executive John Fellet said in a statement.

“The combined group will offer exciting new packages with Sky’s premium entertainment content, Vodafone New Zealand’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 per cent  on the announcement, while Vodafone’s main rival, Spark, dropped 5.02pc. 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 will need 75pc approval to proceed.

It will also need the green light from New Zealand’s competition watchdog.

Under the deal, Sky will buy Vodafone New Zealand using a combination of shares and 1.25bn New Zealand dollars in cash, which it said was “equivalent to enterprise value of 3.44bn New Zealand dollars”.

But Vodafone New Zealand’s British parent company, Vodafone Group, will have a 51pc 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. But it has been under increasing pressure recently from services such as Netflix.

Vodafone New Zealand made a 121 million New Zealand dollars loss in 2014-15 but boasts the country’s most mobile phone connections, providing a prime platform for distributing Sky’s content.

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