June 27 (Bloomberg) -- Univision Communications Inc., the largest U.S. Spanish-language broadcaster, accepted a $12.3 billion offer from a group including billionaire Haim Saban, falling short of what the company had sought.

Investors will get $36.25 a share in cash, Los Angeles-based Univision said today in a statement. The price is 13 percent more than Univision's closing price of $32.03 yesterday. The buyout group includes Madison Dearborn Partners, Providence Equity Partners Inc., Texas Pacific Group and Thomas H. Lee Partners LP.

The price trailed the $40 analysts said Univision wanted after partners dropped out of a rival bidding group that included Grupo Televisa SA. Concern about slowing growth in the Hispanic television market and increasing interest rates limited the offers. Univision's sales growth will slow to 4 percent in 2007 from 13 percent this year, according to the average estimate in a Thomson Financial survey of analysts.

``It was less then we thought they were willing to accept going into the first round,'' said David Bank, an RBC Capital Markets analyst in New York, who rates the stock ``outperform'' and said he doesn't own it.

The winning group raised an earlier offer of $35.50. Shares of Univision gained $1.97, or 6.2 percent, to $34 at 4:01 p.m. in New York Stock Exchange composite trading. Chief Executive Officer Jerrold Perenchio, 75, put the company up for sale in February, when the stock was trading at $30.54.

Considering Options

Televisa in a statement said Univision and its advisers refused to enter talks about matters including price after the bid was submitted. That bid, submitted last week, exceeded the $35.50 that the winning group initially offered. Mexico City- based Televisa is considering ``options to build its potential in the growing U.S. Hispanic marketplace,'' it said without elaborating.

Univision said it expects the purchase, which includes the assumption of $1.4 billion in debt, to close early next year.

Thomas H. Lee, Texas Pacific, Providence Equity and Madison Dearborn will each contribute $900 million to the Univision buyout, with Saban putting in about $250 million, for a total of almost $4 billion, people familiar with the matter said. The group will take on $9 billion to $10 billion of debt.

Saban's Background

Saban, 62, who is based in Los Angeles, made his fortune with the ``Power Rangers'' television series.

He was born in Alexandria, Egypt, and moved to Israel in 1957, according to Who's Who in European Business and Industry.

In 1973, Saban moved to France and founded Saban Records. He started Saban Entertainment in Los Angeles in 1980, importing the ``Power Rangers'' children's television show to air in the U.S.

Saban partnered with Rupert Murdoch's News Corp. to create the Fox Family cable TV network, which was sold to Walt Disney Co. in 2001 for $5.3 billion. He also holds a controlling stake in German broadcaster ProSiebenSat.1 Media AG with private equity partners.

Perenchio, who has 12 percent of the stock and 58 percent voting control of Univision, was seeking as much as $40 a share, said David Miller, an analyst with Sanders Morris Harris in Los Angeles. The goal may have been thwarted by a perception that audience growth will slow as Hispanics become more affluent and move to other types of entertainment, Miller said.

Slowing Growth

``Five to seven years down the road a certain level of affluence will come to the Hispanic market,'' Miller said. ``More Hispanics will be listening to satellite radio and listening to iPods'' rather than watching television, he said.

The winning bidders will get two TV networks, Univision and TeleFutura, with an 80 percent share of the fastest-growing U.S. television market. The broadcaster dwarfs rivals such as NBC Universal's Telemundo and TV Azteca SA's Azteca America.

The auction almost stalled when Televisa, the world's largest Spanish-language broadcaster, lost four of its partners and failed to pull together an offer by a June 20 deadline.

Carlyle Group, Blackstone Group LP and Kohlberg Kravis Roberts & Co. dropped out before the Televisa bid was made amid disagreements over how much to offer, said people familiar with the decisions. Venevision Investments LLC, owned by Venezuelan billionaire Gustavo Cisneros, also dropped out on June 23.

The defections left a bidding group comprised of Televisa, Boston-based Bain Capital LLC and Kirkland, Washington-based Cascade Investment LLC, the investment company owned by Microsoft Chairman Bill Gates.

Venevision is keeping its options open, including the possibility of partnering with the winning group, said Cisneros spokeswoman Antonieta de Lopez. She wasn't more specific.

Interest Rates

The buyout firms' ability to fund a purchase was crimped by declines in the prices for high-yield, high-risk debt. The extra yield, or spread, investors demand to own so-called junk bonds over U.S. Treasuries had widened 22 basis points this month to 334 basis points, or 3.34 percentage points. The average yield for those securities climbed to 8.77 percent versus 8.45 percent, Merrill Lynch & Co. indexes show.

Moody's Investors Service today lowered its rating on $1.4 billion in Univision debt one notch to Baa3, the lowest investment grade, and said additional cuts were likely, citing the amount of debt the company will have after the buyout. Fitch downgraded Univision to junk, giving it a BB rating that it said could fall further.

The failure to land Univision would be a setback for Televisa CEO Emilio Azcarraga, 38, who has clashed with Perenchio.

Azcarraga quit Univision's board last year and in February accused Univision of a ``material breach'' in a contract that gives Univision exclusive rights to Televisa shows until 2017. Univision has said it disagrees there was a material breach.

Audience Gains

Televisa, which owns 10 percent of Univision, supplied 39 percent of its programming in 2005 and was paid about $136.5 million in royalties and licensing fees. Venevision, which has a 5.9 percent stake, also provides programming to Univision. Each holds warrants that would boost its stake upon exercise.

Among younger viewers, Univision's prime-time TV audience jumped 17 percent to 2 million in 2005, outpacing the growth rates for the four major English-language networks, which as a group fell 5 percent to an average of 4.2 million viewers per night, Univision said in February.

That will help push Univision's sales up 10 percent to about $1 billion this year in the so-called upfront market, when networks sell commercial time for the TV season that starts in September, Miller Tabak & Co. analyst David Joyce said.

Univision also owns the Galavision cable television network, and is the largest Spanish-language radio broadcaster in the U.S. with 69 stations.

Univision was advised by UBS AG. The buyout group of Chicago-based Madison Dearborn, Rhode Island-based Providence, Fort Worth, Texas-based Texas Pacific and Boston-based Thomas H. Lee was advised by Credit Suisse Group, Deutsche Bank AG, Bank of America Corp. and Wachovia Corp.

Law firm Skadden, Arps, Slate, Meagher & Flom LLP advised Univision, and Weil, Gotshal & Manges LLP and Hogan & Hartson LLP advised the buyers.

To contact the reporters on this story: Dana Cimilluca in New York at dcimilluca@bloomberg.net; Michael White in Los Angeles at mwhite8@bloomberg.net.

Last Updated: June 27, 2006 18:00 EDT