Orcon Group, 2degrees merger clears final hurdle with OIO approval

Orcon Group CEO Mark Callander (pictured), who will lead the combined company. 2degrees chief executive Mark Aue will depart after operations are combined - which should be by June 1. Photo / Leon Menzies

The merger between Orcon Group (aka Vocus NZ) and 2degrees has cleared its final hurdle after the Overseas Investment Office granted consent.

The deal earlier gained Commerce Commission, GCSB and shareholder approvals.

Orcon Group chief executive Mark Callander, who will lead the merged business, said: "We expect the transaction to be finalised in the coming weeks and will come together as a combined business on June 1."

The combined business would be known as 2degrees, Callander said.

Orcon Group's various sub-brands, including Orcon, Slingshot, Flip and 2Talk will continue to be used. The firm also owns a nationwide fibre network spanning more than 4000km, a small power retailer (Switch Utilities) and provisions service for Sky TV's Sky Broadband.

The new company will combine 2degrees' mobile network with Orcon Group's more landline-focused business for what analysts see as a stronger number three competitor to Spark and Vodafone.

The merged company's combined revenue will be around $1.2 billion next to Spark's $3.59b and Vodafone NZ's $1.95b for 2021.

Source / Vocus NZ

The merger of Orcon Group and 2degrees operations follows the transaction just approved by the OIO in which Orcon Group's Australian parent, Voyage, bought 2degrees from its US parent Trilogy.

Orcon Group and 2degrees put their respective local IPO plans on hold as deal talks began late last year. Callander says a listing is now off the table.

Jarden research head Arie Dekker earlier said given new corporate parent Voyage (in turn owned by investment bank Macquarie Group and Aware Super) had deep pockets, there was now no need for an IPO to raise capital.

There has been speculation that the combined Orcon Group and 2degrees could, in turn, merge with Sky TV. Dekker earlier said that was unlikely. Such a deal would add risk and volatility, and regulatory headwinds.