New Zealand’s Overseas Investment Office (OIO) has approved the merger of SKY Network Television and Vodafone New Zealand, positioning the watchdog at odds with the Commerce Commission, which rejected the deal in February this year. An OIO press statement noted: ‘The fact that Vodafone and SKY were recently unsuccessful in their application to the Commerce Commission for clearance to this merger was not relevant to the OIO’s assessment. The Commerce Commission test relates to competition in a market which is different to the criteria that the OIO is required to consider for an application involving significant business assets.’ The merger required Overseas Investment Act approval because Vodafone and SKY are more than 25% owned by overseas interests and the purchase price and asset value are each more than NZD100 million (USD68.8 million). It remains to be seen whether the two companies will be successful in overturning the Commerce Commission’s decision via the appeal process, however.
As previously reported by CommsUpdate, in June 2016 SKY (which is New Zealand owned and not part of the European satellite TV group of the same name) agreed to acquire all shares in Vodafone NZ for a total purchase price of NZD3.437 billion through the issue of new SKY shares – giving UK-based Vodafone Group a 51% interest in the merged company – plus a cash consideration of NZD1.250 billion, to be funded through new debt. The merged SKY/Vodafone entity would have been controlled by Vodafone Group. However, in February the Commerce Commission rejected the proposed takeover, citing concerns over the negative impact on competition in the broadband and mobile communications markets. Chair of the Commerce Commission Dr Mark Berry stated that the watchdog had outlined its concerns over the merger in October 2016 and subsequent submissions had not resolved these worries.