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Sky shareholders back Vodafone merger

NZ NewswireNZ Newswire 5/07/2016 Fiona Rotherham

Sky Television shareholders have voted in favour of a proposed merger with Vodafone New Zealand that will create a media and entertainment provider with combined 2016 revenue of more than $2.9 billion and more than 3.7 million separate mobile and fixed connections and television subscriptions.

At a special meeting in Auckland on Wednesday, shareholders cast their votes on three resolutions relating to the acquisition to incur new debt by Sky and issue shares to Vodafone, with 75 per cent of the vote required to pass them. Votes cast at the meeting were overshadowed with 78.61 per cent of the Sky TV shares on issue voted by proxy and overwhelmingly in favour of the merger.

Under the proposal, Sky will purchase Vodafone NZ from its parent company for $3.44b, which will be funded by a payment of $1.25b in cash and the issue of new Sky shares at a price of $5.40 per share. Vodafone becomes a 51 per cent majority shareholder in Sky, in what amounts to a reverse takeover.

Sky will borrow $1.8b from Vodafone to fund the purchase and will have a higher debt post the deal.

Sky TV chairman Peter Macourt said the outcome was "fantastic" and the next step was getting Commerce Commission clearance which was likely to take up to six months.

Sky has said there's potential for the current triple play offerings - fixed line voice, fixed-line broadband and pay television services - into a quad-play by adding mobile.

An independent report by Grant Samuel concluded that Sky TV didn't have an attractive future as a standalone pay-TV business because it faces increased rivalry and a fundamental deterioration in its strategic position over the long term.

Expected savings from the deal, after integration costs, are around $850 million.

Sky shares fell 0.6 per cent to $4.75, having gained 4.1 per cent so far this year.

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