Pro7 Evaluates Interest in Nordic Assets After Approaches
ProSiebenSat.1 Media AG (PSM) (PSM), Germany’s biggest private broadcaster, said it’s evaluating interest in its Nordic assets after its adviser JPMorgan Chase & Co. (JPM) was approached by several parties.
“As a listed company, we have to talk to these people and find out if they are serious, if their valuation of the assets is appropriate and if their potential offers are properly funded,” spokesman Julian Geist said by phone yesterday. The stock jumped as much as 3.3 percent in Frankfurt to the highest price in more than three months.
ProSiebenSat.1 carried out a strategic review of northern European assets last year to reduce debt, and in April 2011 it agreed to sell Dutch and Belgian broadcasting and print operations. The media company decided against a sale of its businesses in Scandinavia even after receiving interest from Discovery Communications Inc. (DISCA) and Modern Times Group AB (MTGB), a person familiar with the situation said at the time.
The Nordic assets may be worth at least 1.4 billion euros ($1.8 billion), which includes the Kanal 5 and Kanal 9 television channels in Sweden and TV Norge, FEM, Vox and Max broadcasters in Norway, according to a person with knowledge of the matter, declining to be identified because the discussions are private. That amount would value the assets at a significant premium to the rest of the company, said Sarah Simon, a London- based analyst at Berenberg Bank.
“That would obviously have significant implications for the way you think about the appeal of a deal,” Simon said. “If you get a huge offer on an asset, you have a duty to look at that. At 1.4 billion euros, as a buyer, you would need to generate pretty huge synergies.”
A high valuation may be the only way a buyer could talk ProSiebenSat.1 out of its holding, Simon said. Since the initial talks were said to be abandoned last year, the company has reduced its debt and ProSiebenSat.1 has committed to reducing its reliance on the German market, both of which make it less probable that they’d be interested in selling, she said.
The proceeds from a sale might be used for further acquisitions or precede an exit by ProSiebenSat.1’s private- equity owners, said Adrien de Saint Hilaire, an analyst at Exane BNP Paribas.
The region generated about 476 million euros in revenue in 2011, or 17 percent of ProSiebenSat.1’s sales, according to data compiled by Bloomberg. Second-quarter revenue from Norway grew 6.4 percent, while in Sweden, sales climbed 12 percent.
Modern Times Group, which has more than 1 million premium pay-TV subscribers in the Nordic region through satellite or third-party networks, would benefit from reduced competition in the region, Saint Hilaire said in a note to investors.
“Consolidation in the most competitive European market would be very positive, with the combined entity enjoying about 45 percent ad market share and unlocking significant synergies,” he said. “MTG might nevertheless need to battle for those assets, as other suitors have been named.”
Modern Times Chief Executive Officer Hans-Holger Albrecht said he wouldn’t comment on “market rumors and speculation” when reached by Bloomberg News yesterday. Elizabeth Hillman, a spokeswoman for Silver Spring, Maryland-based Discovery, declined to comment.
ProSiebenSat.1, which is majority owned by Kohlberg Kravis Roberts & Co. (KKR) and Permira Advisers LLP, climbed as much as 63 cents to 19.42 euros and was trading up 2 percent at 12:06 p.m., adding to yesterday’s 3.4 percent gain. The stock has jumped 36 percent this year, giving the company a market value of 4.2 billion euros.
CEO Thomas Ebeling said in August last year that ProSiebenSat.1 would keep the Nordic broadcasting operations -- which also include assets in Denmark and Finland -- for at least three to five years.
“You should never say never, but it’s really core and we intend to keep it for at least that amount of time,” Ebeling said at the time.
To contact the reporters on this story: Aaron Kirchfeld in London at firstname.lastname@example.org; Matthew Campbell in London at email@example.com; Amy Thomson in London at firstname.lastname@example.org