ProSieben Said to Choose Three Bidders for Nordic Unit

ProSiebenSat.1 Media AG (PSM), Germany’s biggest private broadcaster, has chosen Providence Equity Partners Inc., Nordic Capital and Discovery Communications Inc. (DISCA) for the next round in the sale of its Scandinavian businesses, according to two people familiar with the matter.

BC Partners Ltd. has left the sales process, said the people, who asked not to be identified because talks are private. The assets, which include television channels in Norway and Sweden, may fetch between 1.2 billion euros ($1.6 billion) and 1.5 billion euros and a sale could be completed by the end of this year, they said.

ProSiebenSat.1, controlled by KKR & Co. (KKR) and Permira Advisers LLP, said in August that it was evaluating interest in its Nordic assets after adviser JPMorgan Chase & Co. (JPM) was approached by bidders. The company, based in Unterfoehring, Germany, carried out a strategic review of northern European assets last year to reduce debt. In April 2011, it agreed to sell Dutch and Belgian broadcasting and print operations and held on to the Nordic unit after deeming bids too low.

The German firm owns the Kanal 5 and Kanal 9 television channels in Sweden, and Norwegian broadcasters TV Norge, FEM, Vox and Max. The broadcaster’s second-quarter sales and profit beat analyst estimates, propelled by the Northern European television units and online services. Second-quarter revenue from Norway grew 6.4 percent, while sales in Sweden climbed 12 percent.

‘Credible Candidates’

“They have always taken a view if they get a good offer for any of their assets, they’ll take it,” said Ian Whittaker, an analyst at Liberum Capital Ltd. in London. “The three bidders are all credible candidates” and ProSieben “can wipe out their debt and possibly return cash.”

Officials at ProSiebenSat.1, Nordic Capital, Discovery and BC Partners declined to comment. Officials at Providence were not immediately available to comment.

ProSiebenSat.1 shares erased earlier losses before closing down 0.5 percent at 21.50 euros. The stock has climbed about 52 percent so far this year, giving the company a market value of 4.7 billion euros.

The private-equity firms offered more than Discovery in the indicative offers submitted earlier this month, said one of the people. The bidders will hold talks and examine the company’s figures through November, they said.

Kirch’s Empire

Providence, a firm based in the namesake capital of Rhode Island, manages about $27 billion with a focus on investments in media and education. The buyout firm belonged to a group of investors that teamed up with Hollywood billionaire Haim Saban in 2003 to buy ProSieben after the insolvency of Leo Kirch’s media empire in 2002. They sold the German company to KKR and Permira in 2006.

Nordic Capital is a Swedish private-equity firm that focuses on investments in Scandinavia and German-speaking countries.

Buyout firms typically use loans secured on the targets they acquire to finance more than half of the purchase price, while using cash from their own funds for the rest. Worldwide, the value of private-equity deals announced in the third quarter fell 29 percent to $95.1 billion from a year earlier, according to data compiled by Bloomberg.

Discovery Communications, the cable-television company that owns Animal Planet and Oprah Winfrey’s OWN network, is adding channels and programming in new markets to counter slowing growth in the U.S. The Silver Spring, Massachusetts-based company gets about half its revenue from ads, with the rest coming from rights fees from pay-TV operators.

Nordic Region

“It might be a good time to sell,” said Conor O’Shea, a media analyst at Kepler Capital Markets in Paris. “There are some signs of strain in some of the Scandinavian markets, particularly the Danish market.”

The Nordic region generated about 476 million euros in revenue in 2011, or 17 percent of ProSiebenSat.1’s sales, according to data compiled by Bloomberg.

The unit would fetch as much as 1.5 billion euros if a buyer paid about 12 times earnings before interest, tax, depreciation and amortization, said O’Shea. The expectation is that they may get close to the top of the range, he said.

To contact the reporters on this story: Aaron Kirchfeld in London at akirchfeld@bloomberg.net; Amy Thomson in London at athomson6@bloomberg.net

To contact the editors responsible for this story: Jacqueline Simmons at jackiem@bloomberg.net; Kenneth Wong at kwong11@bloomberg.net

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