Here's why Sky Network Television Ltd shares soared 20% today

Sky Network Television Ltd (ASX:SKT) shares soared 20% today following its deal with Vodafone NZ.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

What: Shares of Sky Network Television Ltd (ASX: SKT) soared as much as 21.7% today following the announcement it'll merge with Vodafone NZ as part of an NZ$3.4 billion deal.

So what: In early May, Sky Network shares slumped 15.6% during one day's trade after the pay-TV operator revealed it was leaking subscribers and the loss would have adverse implications for future profits.

Source: Google Finance
Source: Google Finance

However, Sky Network shareholders got a spring back in their step Wednesday morning when the company requested a trading halt as it undertook discussions "in relation to a potential significant transaction."

This morning, shareholders were delighted by the announcement that Vodafone NZ will merge with Sky Network to create a company which will deliver "New Zealand's best entertainment content across all platforms and devices."

Under the terms of the merger, Sky Network will issue shares to Vodafone NZ's parent company and pay NZ$1.25 billion in cash. Upon completion, Vodafone will hold 51% of the combined group.

Now what: According to both companies, a significant amount of synergies can be harnessed from the deal. However, bringing two companies together isn't always as easy or as lucrative as the investment banks' financial models make it appear. Therefore, shareholders would be wise to remain cautiously optimistic about the deal and closely track the forecasts which management has provided.

Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any company mentioned in this article. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »