Christchurch’s Tait International has emerged as the suitor of Vital, signalling an upcoming offer of $18.7 million to take the minnow telecommunications firm private at a 64% premium.
The communications network maker intends to mount a formal takeover for Vital, offering 45 cents per share, a premium to the 27.5 cents they traded at before they were halted. It’s also more than the 37.5 cents Simon Herbert’s Empire Technology proposed last year in an aborted partial bid that ended up in the courts.
“The proposed takeover is a strategic move to expand our market positioning, product offerings and reach in New Zealand,” said Tait managing director Yoram Benit said in a statement. “We are confident that Tait is the right owner to support Vital’s future plans in a challenging operating environment, which benefits Vital’s customers, employees and other stakeholders.”
The trading halt was extended for half a day after a delay in providing the formal takeover notice, which includes an independent adviser’s report. Tait expects the report to be ready next week, when it will issue its formal notice.
Vital’s board recommended shareholders wait until a target company statement is prepared, which will include their recommendation on whether or not to accept.
The shares surged 45% to 40 cents when trading resumed.
Plodding along
Vital’s share price has languished for several years as the telecommunications firm fought to regain credibility with investors, turning around the business after its ill-fated foray into rural satellite services in the 2010s.
That had been making headway, with the shares stabilising in 2024 with a 2% increase snapping four years of annual declines – three of which were double-digit.
Meanwhile, Tait International has grown hungry for acquisitions since Japan’s JVC Kenwood Corp came on as a 40% shareholder in 2018 to help fuel its global ambitions.
The privately held company’s revenue almost doubled to $426.6 million in the June 2024 year, with a net profit of $51.2 million compared to $11.7 million in the June 2023 year.
Tait’s revenue was $148.6 million in the June 2020 year – the earliest statements lodged with the Companies Office – to generate a profit of $4.3 million.
New friends
In 2023, Tait bought Australia’s RFI Holdings, which makes high-performance antennas for radio and cellular networks, paying $45.9 million upfront, with a $12.6 million deferred payment and earnouts of up to $8.2 million.
Tait noted Vital’s nationwide digital radio network, fibre network in Wellington city and parts of Auckland, data centres, and two peering exchanges in its statement on the proposed acquisition.
Vital rejected an indicative partial offer from Simon Herbert’s Empire Technology last year, which led to the filing of a formal takeover notice that was subsequently withdrawn.
Empire and Vital have been at odds over who should foot the bill on costs, with the Takeovers Panel mostly siding with the listed telco in a decision in March.
Herbert plans to appeal the decision.
Spark New Zealand sought to buy Vital in 2017 when it was called TeamTalk, offering 80 cents a share and valuing the smaller telco at $22.7 million. That was a 72% premium to where the stock was trading at the time, but was rejected as being too low and an opportunistic bid with the companies trading barbs over Grant Samuel’s independent valuation of $1.52-to-$2.11 a share.
Back then, TeamTalk still owned the Farmside satellite business, which it went on to sell to Vodafone NZ – now One NZ – for $13 million.
Reporting by Paul McBeth. Image from Shahadat Rahman on Unsplash.
