TeamTalk shareholders approve Farmside purchase for up to $42m
Shareholders of TeamTalk, the owner of the CityLink fibre-optic broadband service, have voted in favour of the acquisition of Farmside Group for up to $42 million to extend its reach into rural areas.
The Wellington-based company has agreed to buy Farmside (which claims around 15,000 customers) for an upfront payment of $19 million in cash and $12 million in TeamTalk shares, with an additional $7 million cash and $4.1 million in scrip in potential earn-outs over the following 12 months.
Farmside will operate as a subsidiary of TeamTalk and continue to be based in Timaru. Farmside's sellers will also be entitled to appoint a director to the TeamTalk board.
The acquisition will almost double TeamTalk's revenue, with Farmside reporting sales of $25.4 million in the 12 months ended June 30, some 43 percent of pro-forma revenue.
Still, the rural telecommunications firm's margins aren't as fat as TeamTalk's with pre-tax earnings of $2.1 million, or about 20 percent of pro-forma earnings before interest and tax.
TeamTalk shares rose 2.8 percent to $2.98 and have climbed 36 percent this year.