Sky & Vodafone NZ Merge To Create Telecom & Media Group
Sky Network Television Limited (“SKY”) (NZX: SKT; ASX: SKT) and Vodafone Group Plc (“Vodafone Group”) (LON: VOD, NASDAQ: VOD) today announced that they have reached an agreement to create a leading integrated telecommunications and media group in New Zealand, via a combination of SKY and Vodafone New Zealand Limited (“Vodafone NZ”) (together the “Combined Group”).
SKY will acquire all of the shares in Vodafone NZ for a total purchase price of NZ$3,437 million (cash and debt free), through the issue of new SKY shares giving Vodafone Europe B.V. (“Vodafone”)8 a 51% interest in the Combined Group and cash consideration of NZ$1,250 million, to be funded through new debt. The new SKY shares will be issued at a price of NZ$5.40 per share, representing a 21% premium to SKY’s last close of $4.47 and 27% premium to SKY’s 1 month VWAP of $4.25 on 7 June 2016.
Vodafone NZ is New Zealand’s leading mobile and clear number two broadband provider, with over 2.35 million mobile connections and over 500,000 fixed-line connections9. SKY is New Zealand’s leading pay TV provider with over 830,000 subscribers10, servicing New Zealand households with its portfolio of premium content.
SKY Chairman Peter Macourt said “The merger with Vodafone is a transformational strategic step for our company. The transaction is also highly attractive to our shareholders. Our shares are being issued at a premium to market price and shareholders also participate in the substantial synergy benefits we expect from the transaction.”
SKY Chief Executive John Fellet said “This is a significant and positive step in SKY’s evolution as a premium entertainment company. We already enjoy an excellent partnership with Vodafone, bringing together our two highly complementary businesses is in the best interests of shareholders and customers. The Combined Group will offer exciting new packages with SKY’s premium entertainment content, Vodafone NZ’s communications and digital services of the future.”
Vodafone NZ Chief Executive Russell Stanners said “This is an exciting time for the rapidly evolving communications and entertainment industries. The merger brings together SKY’s leading sports and entertainment content with our extensive mobile and fixed networks, enabling customers to enjoy their favourite shows or follow their team wherever they are. The combination with SKY will bring greater choice, enhanced viewing experiences and will better serve New Zealanders as demand for packaged television, internet and telecoms services increases.“
The Combined Group will be one of the largest companies listed on the NZX Main Board (“NZX”). For the year ending 30 June 2017 (“FY2017E”), the Combined Group will have forecast pro-forma revenue of NZ$2,914 million, Underlying EBITDA of NZ$786 million11, Underlying Operating Free Cash Flow of $467 million12 and Underlying Free Cash Flow of NZ$298 million13 prior to synergies and integration costs.
7 Refer to section titled “Independent Adviser and Appraisal Report” for further details
8 A wholly owned subsidiary of Vodafone Group Plc
9 As at 31 March 2016
10 As at 30 June 2016 based on a forecast number
11 Earnings before interest, tax, depreciation, amortisation and impairment, adjusted to exclude certain one-off expenses (a non- GAAP earnings measure)
12 Cash generated from operations less capital expenditure, adjusted to exclude certain one-off cash flow items (a non-GAAP cash flow measure)
Source: Sky New Zealand