TeamTalk yesterday recommended that its shareholders reject Spark's share purchase offer of $0.80c per share because the price is far too low.
The company says an independent adviser valuation range was put at $1.52-$2.11, much higher than the price Spark is offering.
TeamTalk and Grant Samuel - Associates Ltd, the independent adviser, released a statement to NZX yesterday that reported on the ‘merits' of the Spark offer and an independent assessment value.
“The underlying value of TeamTalk's shares is in the range of $1.52 to $2.11 per share”, and that “as the Spark Offer of 80 cents per share is below Grant Samuel's assessed value range for TeamTalk's shares there is no compelling reason to accept the Offer,” the report says.
However, Spark CFO David Chalmers also released a statement, which calls the valuation is just not credible.
“We believe the valuation lacks real world credibility. The top end of the range represents a premium to the last trading price before the Spark notice of intention of 369%, which is patently absurd,” Chalmers says.
“This 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,” he continues.
However, TeamTalk says Spark's ‘opportunistic' and ‘hostile takeover bid' wasn't solicited at all by TeamTalk.
“TeamTalk's Directors did not encourage or solicit Spark's 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,” comments TeamTalk chairman Roger Sowry.
He says that the Grant Samuel report shows that Spark's offer is “Woefully inadequate” and doesn't reflect TeamTalk's new strategy or growth or any value to benefits Spark would get in the unlikely event that the offer succeeded.
TeamTalk CEO Andrew Miller says Spark's ‘predatory' offer is an attempt to exploit challenges TeamTalk faced last year, but now TeamTalk is profitable again.
He says that if shareholders accepted the one-time $0.80 offer, they would forgo any future dividends and hand control to Spark at a discount.
“Accordingly, we are firmly of the view that shareholders will be much better served by staying the course and benefitting from the uplift in TeamTalk's performance than selling their shares for 90% to 164% less than the assessed fair value to Spark,” he says.
“Spark's Offer is without merit and not in the interests of TeamTalk shareholders. It is an attempt to gain control of TeamTalk's strategic assets for significantly less than the company's fair value,” Sowry adds.
“TeamTalk's Directors unanimously recommend that shareholders reject Spark's Offer in respect of all their TeamTalk shares,” Sowry says.
Meanwhile, Vodafone New Zealand has just acquired a 70% stake in TeamTalk's Farmside business for $10 million in cash, subject to approval by shareholders.
“For TeamTalk, this transaction will enable a substantial reduction in debt, provides a clear path forward for Farmside, and further assists TeamTalk to consider the resumption of dividends to shareholders in calendar year 2018. It also enables us to strengthen our partnership with Vodafone, a significant provider to rural New Zealand," Miller says.