Vodafone Group Plc (ADR)(NASDAQ:VOD) has confirmed that it will be acquiring 70% of TeamTalk’s Farmside subsidiary after the approval of TeamTalk shareholders. The proposed transaction is valued at $13 million. For the 70%, Vodafone will be spending NZ$10 million in cash but there is also an option of acquiring the 30% remainder at a cost of NZ$3 million.
The transaction is timely according to TeamTalk CEO, Andrew Miller. He says that it will help in reducing the company’s debts which amount to NZ$33.2 million. Besides, it will also offer a clear path forward for Farmside.
The collaboration is an opportunity to serve the rural broadband market better
TeamTalk would continue running the management of Farmside even after the sale. However, above everything else, the new collaboration will foster a longstanding relationship between the two companies. This will not only run in the present ay but it will go a long way into the future.
Russell Stammers, Vodafone CEO says, “This is an opportunity to deliver better outcomes for rural customers, to increase our presence in the rural broadband market and to utilize the skill sets of the two complementary companies.”
The deal is vindication of TeamTalk’s board strategy
TeamTalk chairman, Roger Sowry says that they have been seeking to implement the company’s turnaround strategy before the opportunity came around. They needed to have the company realize its inherent potential while at the same time maximizing the shareholder’s value.
Earlier on, TeamTalk’s board had rejected an offer by Sparks amounting to $22.7m, a move that Sparks did not take kindly. Sparks expressed its interest in acquiring TeamTalk in February citing that it was seeking to expand its provision of internet services across the country.
Sparks has also previously attempted to merge with pay TV provider Sky TV, a deal which did not see the light of day. It failed clearance from the New Zealand Commerce Commission. Sparks has had enough issues including stiff market competition. Meanwhile, Vodafone NZ’s stock closed at $26.78 witnessing an increase of $0.25 or 0.94%.
