LONDON (Alliance News) - Vodafone Group PLC Thursday said it has struck a deal with New Zealand's Sky Network Television Ltd to form a new venture in the country through a combination with its Vodafone New Zealand unit.
Sky Network is a pay television provider in New Zealand, established in 1987 and with over 830,000 subscribers. It has no connection to London-listed Sky PLC. Sky-founder Rupert Murdoch's News Corp did hold a 44% stake in Sky Network for a time, but this was sold in 2013.
Vodafone New Zealand has been operating in the country since 1998 and had over 2.35 million mobile and 500,000 fixed line connections as at the end of March 2016.
Sky Network will buy all the shares in Vodafone New Zealand for a total NZD3.44 billion, equivalent to GBP1.69 billion at current exchange rates, and the issue of new shares in Sky Network to Vodafone Europe BV, giving Vodafone a 51% stake in the business.
The remaining cash consideration of NZD1.25 billion will be funded through new debt. Sky Network has entered into a facility agreement with Vodafone Group for an amount of up to NZD1.8 billion to fund the cash consideration for the acquisition, transaction related costs, and to repay its existing debt and fund working capital requirements for the combined group following completion.
The shares in Sky Network will be issued at a price of NZD5.40 per share, representing a premium to Sky Network's last close of NZD4.47.
If approved by shareholders, the deal will create one of the largest companies listed on the NZX Main Board in New Zealand. For the year to end-June, the new company - for which no new name was announced - will have a forecast underlying earnings before interest, tax, depreciation and amortisation of NZD786 million, on pro-forma revenue of NZD2.91 billion.
Upon completion, the initial board of the new business will comprise five directors from the existing Sky Network board and four directors appointed by Vodafone. Sky Network Chairman Peter Macourt will chair the combined group, whilst Vodafone New Zealand Chief Executive Officer Russell Stanners will assume the same position for the combined group.
Sky Network Chief Executive John Fellet will be appointed chief executive officer of media and content, reporting to Stanners.
The deal is subject to shareholder approval, with a meeting of Sky Network shareholders expected to take place during early July. Sky Network's directors have unanimously recommended shareholders vote in favour of the deal.
The deal follows an agreement between Vodafone and Liberty Global Inc earlier this year to form a new joint venture in the Netherlands, combining Vodafone's Netherlands business with Liberty Global's Ziggo brand.
Shares in Vodafone Group were down 1.5% at 219.90 pence Thursday morning.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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