SKY and Vodafone NZ merging to create a leading integrated telecommunications and media group in New Zealand. The Combined Group will have the ability to offer New Zealand’s best entertainment content across all platforms and devices in a rapidly evolving media and telecommunications market.
The Combined Group will provide an enhanced customer experience and greater choice of products and services, as well as attractive offers of entertainment content, broadband and mobile to meet the growing consumer demand for packaged services.
Vodafone will become a 51% shareholder in the Combined Group as a result of a consideration comprising an issue of new SKY shares and NZ$1250 million in cash, equivalent to an Enterprise Value (“EV”) of $3,437 million.
New SKY shares will be issued at $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.
The Combined Group is expected to deliver cost, capital expenditure and revenue synergies with a net present value (“NPV”) of approximately NZ$850 million, or NZ$1.07 per share.
The transaction is expected to be accretive to Underlying Free Cash Flow 4 per share for SKY shareholders on a pro - forma FY2017E basis (prior to synergies and integration costs), with additional benefits delivered over time as synergies are realised.
The stronger cash flow generation and anticipated synergies are expected to support increased dividends for SKY shareholders.
The directors of SKY unanimously recommend its shareholders to vote in favour of the resolutions to implement the proposed transaction.
