Spark says 80c/share is final offer for TeamTalk, won't waive conditions if Farmside deal proceeds
Spark New Zealand says its hostile 80 cents-a-share offer for TeamTalk is final and it won't waive a condition that the proposal will lapse if the target company sells its Farmside internet services provider to rival Vodafone New Zealand.
TeamTalk shareholders are to vote on the $10 million sale of Farmside to Vodafone on April 12, a deal that would help cut debt at the telecommunication minnow. Vodafone would buy 70 percent of Farmside with an option to pick up the rest any time in the next three years for a further $3 million.
Spark has dropped the condition that its offer requires 90 percent acceptance and would now become unconditional if it reaches 50 percent shareholder acceptance. If the Farmside deal is approved, Spark's offer would lapse, it said.
“Spark needs to be disciplined in how we invest our shareholder’s capital," said chief financial officer David Chalmers. "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."
Spark and TeamTalk have been in a war of words over TeamTalk's value after the target company commissioned an independent valuation of $1.52-to-$2.11, which Spark called an "absurd premium". TeamTalk's shares have more than doubled this year and last traded at 97 cents, suggesting investors expect Spark to sweeten its offer but are doubtful about the valuation.
“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,” Chalmers said.
Should the Farmside deal be approved and Spark's offer lapse, Spark would look at alternative options to TeamTalk's CityLink service to meet its objectives for fibre in Wellington, it said.
TeamTalk's board unanimously backs the Vodafone deal, which the firm says will immediately cut financing costs and debt levels, providing greater room to invest in upgrading TeamTalk's mobile radio network and Wellington fibre network. It would also boost the likelihood of dividends being resumed next year, directors have said.