Telco Spark has formally launched its hostile $22.7million takeover of minnow Team Talk, which offers a more than 80% premium to shareholders.
The hostile bid appears set to get nasty, as TeamTalk dismisses the offer as ''woefully inadequate,'' while Spark dismantles TeamTalk's past financial performance, brick by brick.
Spark's chief financial officer David Chalmers believed the offer was in the best interests of TeamTalk's shareholders, many of whom have seen the value of their investment in TeamTalk ''relentlessly decline'' in recent years.
TeamTalk's chairman Roger Sowry responded to the offer and recommended shareholders ''take no action,'' describing it as ''woefully inadequate'' and Spark's tactics as ''predatory and opportunistic''.
''TeamTalk's directors are firmly of the view that the Spark offer is inadequate and significantly below fair value for TeamTalk,'' he said.
TeamTalk's business comprises mobile radio services, CityLink fibre services (mainly in Wellington) and its rural internet provider Farmside, with about 15,000 customers.
TeamTalk's board last year rejected a 60c-per-share indicative offer from Spark, describing it as ''opportunistic''.
Craigs Investment Partners broker Peter McIntyre said it was likely TeamTalk shareholders were ''hung'' in their decision to sell.
While there was the more than 80% premium to consider, they should wait for the independent valuation.
''It [offer] is obviously not high enough for TeamTalk, but for some shareholders, they may see it as a good point to exit,'' he said.
Mr Chalmers said the 82% premium offered to shareholders was one of the highest premiums on the over the pre-offer market price for any takeover on the NZX ''in at least the last decade''.
The offer is open till April 22.
When the takeover was first mooted a month ago, TeamTalk's board rejected Spark's proposal, telling shareholders alternative offers might resurface with better, revised valuations.
Mr Sowry labelled the Spark offer ''hostile'' at the time and recommended shareholders not to sell, but did allow Spark to undertake ''limited due diligence''.
Mr Chalmers yesterday said while TeamTalk had agreed to provide limited due diligence, much of the information requested was not delivered, and that provided ''was of little substance.''
Spark's formal offer listed a litany of announcements by TeamTalk since 2013 on downgrades to earnings and profits, weakened cash generation, increasing debt, the reduction then suspension of dividends and the write-down of Farmside, and other assets.
Mr Sowry responded that TeamTalk was ''making excellent progress'' on its turnaround strategy, as shown in its interim results last week.
TeamTalk's earnings were forecast to grow strongly over the next two years and reach an after-tax profit in the range of $4.1million to $5.6million by June 2018, Mr Sowry said.
TeamTalk's new management team was ''delivering to the plan'' he said.
Mr Sowry countered the TeamTalk board had suggested there might be significant value in the business, above Spark's offer price, based on the promise of a new strategic business plan.
''We have yet to see any concrete evidence of such a plan,'' he said.
TeamTalk shares rocketed from 45c to 75c on the day of the 80c offer. Its shares were up slightly at 78c following yesterday's announcement.
