New Zealand pay-TV operator Sky will pay more than $NZ3.4 billion to acquire Vodafone NZ and create the country's largest telecommunications and media group.
Details of the merger were outlined in documents released to the NZX on Thursday and say Sky will stump up almost $NZ3.44b in cash and shares to buy the telco.
The deal will see Sky pay $NZ1.25b in cash and issue new shares to give Vodafone Europe a 51 per cent stake in the new entity.
Sky plans to borrow $NZ1.8b from Vodafone to fund the purchase, repay its existing debt and fund the working capital needs of the group after the merger.
Vodafone's local head Russell Stanners will become chief executive of the combined company, with Sky head John Fellet to become chief executive of media and content, reporting to Mr Stanners.
"The merger brings together Sky's leading sports and entertainment content with our extensive mobile and fixed networks, enabling customers to enjoy their favourite shows or follow their team wherever they are," Mr Stanners said.
"The combination with Sky will bring greater choice, enhanced viewing experiences and will better serve New Zealanders as demand for packaged television, internet and telecoms services increases."
The merger comes after a review of Sky's options to deliver long term value creation for shareholders. Its board unanimously recommends shareholders vote in favour of the deal, with a meeting expected to be held early July.
The deal requires approval by shareholdings holding more than 75 per cent of votes cast at the meeting.
The new Sky shares to be issued to Vodafone at $NZ5.40 apiece, representing a 21 per cent premium to Sky's last traded price of $NZ4.47.
The combined group will be one of the largest companies on the NZX.
Shares in Sky TV were placed in a trading halt on Wednesday prior to an announcement which confirmed the merger talks after speculation.
The two companies are already in partnership offering bundled deals to consumers consisting of a Sky TV package, broadband and phone services.
Sky has been battling falling subscriber numbers amid competition from online streaming services Netflix and Lightbox.
The transaction is conditional on approval from the Overseas Investment Office and clearance from the Commerce Commission. Sky and Vodafone expect it to be completed around the end of 2016.
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