March 4 (Bloomberg) -- Telecom Italia Media SpA agreed to sell its La7 television unit to Cairo Communication SpA for 1 million euros ($1.3 million), rejecting a rival offer from a private-equity fund led by Claudio Sposito.
The television company will be recapitalized before the sale and Telecom Italia SpA, the controlling investor in Telecom Italia Media, agreed to waive 100 million euros of receivables owed by its media unit, according to a stock-exchange statement. The capital injection will allow La7 to have shareholder equity of 138 million euros.
While La7’s losses totalled about 1 billion euros in the past decade, the network’s programming gained market share in the last three years after it attracted prominent Italian TV journalists Enrico Mentana and Gad Lerner. The sale excludes La7’s 51 percent interest in MTV Italia.
Cairo Communication, founded by Urbano Cairo, was picked last month for exclusive talks with Telecom Italia, Italy’s biggest phone company. Cairo is a former aide to ex-premier Silvio Berlusconi.
Clessidra SGR SpA, the private-equity fund led by Sposito, had made an offer for Telecom Italia Media assets, including some infrastructure, valued at about 300 million euros ($390 million), according to a person familiar with the matter, who asked not to be identified because the details of the bid were confidential.
Telecom Media’s board also approved the company’s new business plan for 2013 to 2015, which targets an annual average revenue increase of 11 percent. It’s aiming for an annual average rise of earnings before interest, taxes, depreciation and amortization of 36 percent.
The company reported a 2012 net loss of 240.9 million euros. Telecom Italia Media fell 6.4 percent to 15.7 cents in Milan, giving it a market value of 228.4 million euros. Telecom Italia was little changed at 54.6 cents.
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