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Spark offer 'opportunistic': TeamTalk

NZ Newswire logoNZ Newswire 22/03/2017 Tina Morrison

Telco TeamTalk has advised its shareholders to reject a "hostile and opportunistic" takeover offer by Spark, saying the price is below an independent valuation and seeks to take advantage of a low point in its shares.

Spark, New Zealand's biggest telecommunications group, has offered 80 cents per share for TeamTalk, a 78 per cent premium to where TeamTalk shares traded before Spark announced its intentions in February.

However Wellington-based TeamTalk said on Thursday that a report by independent adviser Grant Samuel & Associates found the underlying value of TeamTalk is between $1.52 to $2.11 per share, prompting its directors to unanimously recommend shareholders reject the offer.

"From the outset, we saw Spark's offer as a hostile and opportunistic attempt to exploit a low point in TeamTalk's recent trading history and before TeamTalk's shareholders benefited from the turnaround strategy underway," said TeamTalk chairman Roger Sowry.

"The Grant Samuel report validates our earlier assessment that Spark's offer is woefully inadequate."

It failed to reflect the value of TeamTalk's new strategy, strong leadership and forecast growth, nor did it attribute any value to the significant synergies and strategic benefits that Spark might capture, he said.

"It is an attempt to gain control of TeamTalk's strategic assets for significantly less than the company's fair value."

Spark's bid came at a time when New Zealand's rapidly changing telecommunications market created headwinds for TeamTalk, resulting in a series of earnings downgrades as margins have come under increasing pressure.

A takeover of TeamTalk would give Spark ownership of fibre in Wellington and a wireless rural internet service provider.

TeamTalk chief executive Andrew Miller says Spark's offer has been tactically made before the company and its shareholders could benefit from a turnaround strategy.

"It is an attempt to exploit the challenges the company faced during 2016. Those challenges have now largely been addressed and TeamTalk is profitable again."

TeamTalk shares last traded at 78 cents, valuing the company at $22.1 million. Spark's offer values the company at $22.7m.

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