New Zealand-based Spark plans to acquire struggling rival TeamTalk in a tie-up designed to expand its range of services for business customers.
TeamTalk is comprised of three business units, operating mobile radio services, a metro fibre business in the city of Wellington called CityLink, and Farmside, an internet ISP dedicated to the country’s rural market.
Spark, New Zealand’s second largest mobile operator, said in a statement the proposed takeover is consistent with its strategy “to achieve greater control of the end-to-end customer experience for our business customers”, as well as its ambitions “to make selective acquisitions of complementary businesses”.
The deal is valued at approximately NZD22.7 million ($16.5 million), representing an offer of NZD0.80 cents per share, a premium of 78 per cent from TeamTalk’s closing price on 3 February.
Spark’s managing director Simon Moutter described the offer as “compelling,” considering TeamTalk’s financial performance had declined in recent years, with a number of profit downgrades and the need for significant reinvestment across the business.
He said the company had a debt of NZD33.6 million (maturing in September 2017), and a “small” market capitalisation of NZD12.8 million.
“Spark, as a digital services company with its own extensive networks, distribution channels and customer base, has the ability to provide a more positive pathway for TeamTalk customers and staff,” he said.
Before proceeding with the acquisition, Spark also requested to complete due diligence on TeamTalk.
Spark may be seeking to shore up its position ahead of a decision on a proposed merger between Vodafone New Zealand and pay-TV provider Sky Network Television. Spark lodged an objection to the tie-up in August 2016, and New Zealand’s Commerce Commission subsequently delayed its ruling on the merger until 23 February.