Vodafone to take 70 percent of TeamTalk’s Farmside for $10.0m

Vodafone NZ has dashed Spark’s hopes of acquiring TeamTalk by agreeing to take a 70 percent stake in TeamTalk’s Farmside subsidiary for a price that puts its value above the upper limit of Grant Samuel’s independent valuation of the TeamTalk business.

The deal requires approval of TeamTalk shareholders and directors are advising them to accept it.

Under the deal Vodafone would acquire 70 percent of BayCity Communications Limited for $10m in cash. BayCity Communications and its wholly owned subsidiaries (trading as Farmside) own and operate TeamTalk’s rural broadband and satellite business. TeamTalk would continue to manage Farmside under a management contract.

The transaction also includes a put option that enables TeamTalk to sell the remaining 30 percent of BayCity to Vodafone for $3m at any time in the next three years. Vodafone would also hold a call option enabling it to acquire the remaining 30 percent in certain circumstances, which have not been spelt out.

Vodafone said the transaction would build on the longstanding relationship between the two companies and would offer the opportunity for synergies beyond Farmside. TeamTalk would continue to manage Farmside under a management contract.

TeamTalk CEO, Andrew Miller said the transaction would substantially reduce debt and would provide a clear path forward for Farmside, and “further assists TeamTalk to consider the resumption of dividends to shareholders in calendar year 2018.”

Vodafone CEO, Russell Stammers, said: “This is an opportunity to deliver better outcomes for rural customers, to increase our presence in the rural broadband market and to utilise the skillsets of the two complementary companies.” He added: “There are other opportunities for us to partner, for instance sharing fibre including future upgrade and maintenance costs.”

TeamTalk chairman, Roger Sowry, hailed the deal as vindication of the board’s strategy. “It further demonstrates that TeamTalk’s executive team, led by chief executive Andrew Miller, are successfully implementing the turnaround strategy to realise the company’s inherent potential and to maximise shareholder value,” he said.

Yesterday Spark responded to the TeamTalk board’s rejection of its $22.7m offer for the company by questioning the competence of the board. CEO David Chalmers said: “[The independent Grant Samuel] report asks shareholders to have enormous faith that the TeamTalk board, many of whom are the same team which has led TeamTalk into what Grant Samuel refers to as the ‘ill-fated’ acquisition of Farmside, and more recent ‘disarray’, will deliver the huge improvement relied on in the valuation.”

Copyright © 2017 IDG Communications, Inc.

Shop Tech Products at Amazon