Sky Network Television and Vodafone NZ agree €2.15bn merger

Sky Network Television and Vodafone New Zealand have agreed a NZ$3.44 billion (€2.15 billion) merger that will see them offer content “across all platforms and devices”.

Citing a “rapidly evolving media landscape” the companies said that the combined group will provide an “enhanced customer experience and greater choice of products and services” – spanning entertainment content, broadband and mobile.

Vodafone will become a 51% shareholder in the combined group through the cash and share deal that has an equivalent enterprise value of NZ$3.44 billion (€2.15 billion). Sky will acquire all of the shares in Vodafone NZ through the issue of new Sky shares and a cash payment of NZ$1.25 billion, which will be funded through new debt.

The new Sky shares will be issued at a price of NZ$5.40 per share, representing a 21% premium to Sky’s last closing shareprice of NZ$4.47, and the combined group will be one of the largest companies listed on the NZX Main Board market.

“The merger with Vodafone is a transformational strategic step for our company. The transaction is also highly attractive to our shareholders,” said Sky chairman, Peter Macourt.

Sky CEO John Fellet described the deal as a “significant and positive step” in Sky’s evolution as an entertainment company, and said the two companies are “highly complementary”.

“The Combined Group will offer exciting new packages with Sky’s premium entertainment content, Vodafone NZ’s communications and digital services of the future,” said Fellet.

Vodafone NZ CEO Russell Stanners said: “The merger brings together SKY’s leading sports and entertainment content with our extensive mobile and fixed networks, enabling customers to enjoy their favourite shows or follow their team wherever they are.

“The combination with Sky will bring greater choice, enhanced viewing experiences and will better serve New Zealanders as demand for packaged television, internet and telecoms services increases.”

News of the deal comes a day after Sky confirmed that it was in discussions with Vodafone NZ about a potential merger and follows media speculation that a deal was in the offing.

News Corp divested its 44% stake in Sky Network Television, New Zealand’s leading pay TV operator, in 2013. As of the end of 2015 the company had 860,455 subscribers.

Vodafone NZ claims to be New Zealand’s leading mobile and number two broadband provider with more than 2.35 million mobile connections and over 500,000 fixed-line connections.

Earlier this year, Vodafone and Liberty Global agreed to merge their operations in the Netherlands, forming a 50-50 joint venture that will combine Ziggo’s fibre broadband network with Vodafone’s mobile operations.