Pay television operator Sky TV yesterday outlined the benefits of a merger between itself and 78 per cent shareholder and former publisher INL.
The firms are to be amalgamated into a third company, MergeCo, which would then be renamed Sky Network Television.
In a presentation, Sky TV said its shareholders
would receive about $500 million in a cash payment from MergeCo.
Among the other benefits it touted were a more efficient capital structure, which would lead to a revaluation of the Sky brand. MergeCo would have about $973 million of shareholders' funds, against Sky TV's $140 million.
The merger would also create a single listed vehicle for investing in Sky TV, thereby doing away with the dual-listed company structure and the two-tier board issue.
In addition, Sky TV said it had limited ability to return capital and constraints on its ability to pay dividends.
The merged firm would have better stock liquidity, 56.4 per cent of its shares being free float and a total of 44.6 per cent locked up by Telecom, Todd Corporation and INL.
MergeCo would be ranked sixth on the benchmark NZSX-50 gross index, with a weighting of 4.5 per cent. This contrasts with Sky TV's 12th ranking on the NZSX-50 with a 1.8 per cent weighting.
Sky TV shares gained 11c yesterday to $6.51, while INL was unchanged at $6.10.
The merger has been on the cards since the now newspaperless INL sold its publishing stable of 80 newspapers and magazines to Australia's John Fairfax Holdings in 2003 for $1.2 billion.
Since the sale, its stake in Sky TV has been its only major asset, apart from cash.
- NZPA
