Telecommunications company Spark has made an offer to buy out market minnow TeamTalk.
Spark is offering 80 cents a share, compared with TeamTalk's 45 cent closing price on Friday. The offer values TeamTalk at nearly $23 million.
TeamTalk operates mobile radio services, Wellington's central city fibre network CityLink, and a rural sector internet service - which Spark said would expand the range of services to its business customers.
The offer was attractive, given the large premium to TeamTalk's last price and that company's generally weak financial performance, Spark said.
"TeamTalk is a small operator in the New Zealand telco market," Spark managing director Simon Moutter said.
"Its financial performance has declined over the last few years, with a number of profit downgrades, and it faces significant re-investment requirements across its businesses."
TeamTalk's relatively high debt level and low capitalisation would constrain its ability to invest in its network, Mr Moutter said.
Spark has asked for access to TeamTalk's books to decide whether to make a bid.
TeamTalk, founded in 1994 by David Ware, hired the investment firm, Cameron Partners, to review the company's operations and options for its future.
Mr Ware abruptly resigned last year because of stress and ill health, saying he had "hit the wall" in running the company.
TeamTalk has labelled the Spark offer "hostile" and said shareholders should reject it.
TeamTalk's chair Roger Sowry said the company was worth more than 80 cents per share.
"The terms of the offer contain over 30 separate conditions some of which are entirely outside the control of TeamTalk, so that even if an offer is forthcoming there is no certainty that it will result in a completed transaction," he said.
Mr Sowry said it was working with advisor Cameron Partners to consider options for the business.
"During 2016, TeamTalk also received other indicative offer approaches....these various approaches highlight the strategic nature of TeamTalk's assets and operations and the potentially higher value which may be available," he said.