TeamTalk has branded as “woefully inadequate” Spark’s formal of $0.80 per share, announced earlier today, and told shareholders to await its target company statement that will be released by 23 March 2017 and that will include an independent adviser’s report from Grant Samuel.
The offer values TeamTalk at $22.7m and is identical to the informal offer made by Spark on 7 February. It follows TeamTalk reporting a half year profit of $1.35m for the six months to 31 December 2016 in the wake of $1.3m loss for the year to 30 June 2016.
TeamTalk chairman, Roger Sowry, accused Spark of ignoring confidential and sensitive due diligence information provided in a bid to persuade Spark to increase its offer significantly above the initial $22.7m figure.
“We also updated the market with profit guidance to 30 June 2018 last week as part of our interim results and turnaround plan update,” he said. “Spark appears to have ignored the information we have made available. Their tactics continue to be predatory and highly opportunistic.”
In a statement TeamTalk said: “The Spark offer is woefully low – it represents a price earnings ratio (PE ratio) of between 4.1 and 5.5 times for TeamTalk’s profit after tax forecast for the year to 30 June 2018. Spark is currently trading on a PE ratio of around 16 times for the year to 30 June 2018. Spark is, therefore offering TeamTalk shareholders a very large discount to Spark’s own valuation rating.”
Spark, however, says its offer represent an 82 percent premium on a three-month volume weighted average price for TeamTalk shares and therefore “is one of the highest premiums over the pre-offer market price for any code takeover on the NZX in at least the last decade.”
Furthermore Spark claims it has seen no evidence of a new strategic plan that the TeamTalk board has claimed will support a much higher value for the company.
Spark CFO, David Chalmers, said: “Spark’s offer provides significantly greater and more immediate certainty than the alternatives advocated by the TeamTalk board, such as holding shares in the belief that performance may significantly improve, or a series of possible sales based on a potential break-up of TeamTalk assets.”
TeamTalk has also cast doubts on the certainty of the deal going through, even if shareholders accept the offer. “The Spark offer contains over 20 conditions. These conditions include a Commerce Commission approval process which could take several months and could result in Spark’s application being declined,” it said.
“Given these conditions TeamTalk shareholders may not know for several months whether or not the offer will be successful and whether they will receive their pay-outs from Spark. The timing of any pay-out, if made, may be uncertain.”
TeamTalk said that none of its 1500 shareholders had agreed to sell any shares to Spark.