Sky Television's share price is at its lowest point in more than eight years after the company and Vodafone withdrew their appeal against the Commerce Commission's rejection of their merger plan.
The pay-TV operator and telecommunications group announced the decision to abandon their merger proposal in a joint statement to the New Zealand stock exchange this morning, without detailing their reasons.
Sky's share price was down 4.13 per cent to $3.25 at around 10:30am. That price is the lowest the shares have traded at since 2008.
The competition regulator had rejected the $3.44 billion media merger, saying the combined group would substantially lessen competition. Sky and Vodafone filed an appeal against the commission's ruling in the High Court in March, to give them time to consider the regulator's reasoning against the decision, and last month amended their appeal to detail their arguments.
"Sky and Vodafone New Zealand will continue to work together to strengthen our commercial relationship for the benefit of the customers and the shareholders of our respective organisations," the companies said in a three-sentence statement to the NZX today.
The merger would have seen Sky TV buying Vodafone NZ for $3.44b, funded by a payment of $1.25b in cash and the issue of new Sky TV shares at a price of $5.40 per share. Vodafone would have become a 51 per cent majority shareholder in Sky TV, in what amounted to a reverse takeover. The pay-TV operator planned to borrow $1.8b from Vodafone to fund the purchase, repay existing debt and use for working capital.
Sky shares last traded at $3.39 and have shed 23 per cent over the past year.