Wednesday 8th February 2017
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TeamTalk says a proposed $22.7 million takeover offer from Spark New Zealand is hostile, highly conditional and recommended shareholders take no action pending further communication from the board.
"The preliminary view of the directors of TeamTalk is that the proposal from Spark does not include significant synergy benefits if Spark were to acquire control of TeamTalk and does not represent fair value for our shareholders," Roger Sowry, TeamTalk chairman, said in a statement.
Auckland-based Spark yesterday said it would pay TeamTalk investors 80 cents per share in a full takeover, a premium to the 45 cents price it was trading at prior to the offer. The shares last traded at 74 cents. Spark wants to integrate TeamTalk's services into the larger group, cutting costs by stripping out any duplication and reviewing the business to see what parts of the Wellington-based network can be grown and whether any units should be divested.
The offer follows TeamTalk's review of operations after the company struggled to integrate the rural ISP Farmside business, acquired in late 2012 for $42 million, which left it with higher debt and flat earnings. TeamTalk shares peaked in January 2013 at $3.20 before issues with the purchase started to emerge.
"There is no certainty that Spark will proceed with a takeover offer and no certainty that 80 cents is the price they will offer. The terms of the offer contain over 30 separate conditions some of which are entirely outside the control of TeamTalk, so that even if an offer is forthcoming there is no certainty that it will result in a completed transaction," said Sowry.
"Based on discussions with other parties, alternative offer approaches may re-surface at revised valuations. A sale of parts of TeamTalk could potentially deliver shareholders value significantly in excess of 80 cents per share," he added.
The board of TeamTalk is working with its investment banking advisers, Cameron Partners, to consider the value maximising options for shareholders, including an offer for all, or parts, of TeamTalk.
Sowry said it will let Spark carry out due diligence on the basis that any forthcoming takeover offer will need to appropriately value the new business plan and the synergy benefits that would accrue to Spark appropriately if it is to be supported by the board.
In addition to Cameron Partners, TeamTalk has appointed Crengle Shreves & Ratner as its legal adviser.
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