Permira, KKR Said to Tap JPMorgan for ProSiebenSat.1 Exit

Permira Advisers LLP and KKR & Co. are working with JPMorgan Chase & Co. on options for their controlling stake in ProSiebenSat.1 Media AG, including a sale, according to a person with knowledge of the matter.

The buyout firms, which own 53 percent of the German broadcaster, may exit this year by selling their stake to another company or on the market, said the person, who asked not to be identified because the discussions are private. ProSiebenSat.1 fell 3.3 percent today in Frankfurt, valuing the holding that may be sold at 2.9 billion euros ($3.9 billion).

“We could see a fall in the share price when the controlling stakes are sold on the market and there aren’t enough buyers,” said Stefan Wimmer, an analyst at Bankhaus Metzler in Frankfurt, who recommends buying ProSiebenSat.1 shares. “A strategic shareholder who keeps the asset for a longer while would be good news to investors.”

Potential bidders may include Time Warner Inc., Comcast Corp. and News Corp., Financial Times reported. ProSiebenSat.1, based in Unterfoehring near Munich, is trying to offset shrinking advertising revenue by pushing digital and on-demand offerings.

Chief Executive Officer Thomas Ebeling on Jan. 30 sold 300,000 shares for about 7.5 million euros, the company said today. The preferred stock dropped from the highest level in 5 1/2 years, declining 85.5 cents to close at 25 euros in Frankfurt trading today.

RTL Sale

Julian Geist, a spokesman for ProSiebenSat.1, and a representative for New York-based KKR declined to comment. A Permira official in Germany couldn’t be reached for comment.

The buyout firms invested in ProSiebenSat.1 in 2006, agreeing to purchase a 50.5 percent stake for 3.1 billion euros from U.S. billionaire Haim Saban’s German Media Partners LP.

Now ProSiebenSat.1 and rivals such as Bertelsmann SE’s RTL Group SA are facing a declining TV-advertising market that’s prompting them to seek new avenues of growth. Bertelsmann said last week it plans to sell a 2 billion euro-stake in RTL as it looks for takeover targets to accelerate growth.

In December, ProSiebenSat.1 agreed to sell its SBS Nordic unit, which included TV networks in Norway, Sweden, Denmark and Finland, for $1.7 billion. On announcing the deal, the company said that at the next annual general meeting investors would vote on converting preferred shares into exchange-listed common stock, which would facilitate an exit for KKR and Permira.

Preferred Stock

KKR and Permira own 18 percent of the preferred shares, which don’t carry voting rights, and 88 percent of the voting common stock, giving them a 53 percent stake in the company, according to ProSiebenSat.1’s website. Dutch publisher Telegraaf Media Groep NV owns the remaining 12 percent of preferred shares.

Private-equity firms pool money from investors with a mandate to buy companies, overhaul and then sell them, and return the funds with a profit. The firms typically use debt to finance the deals and amplify returns.

Permira, started in 1985, advises funds with committed capital totaling about $26 billion. Since 1997, more than 30 percent of investments have been in technology, media and telecommunications companies. The London-based buyout firm in October agreed to buy Inc. in a transaction valued at about $1.6 billion, gaining the world’s largest family-history website.

KKR was started by Henry Kravis, Jerome Kohlberg and George Roberts in 1976. The company had $66.3 billion in assets under management as of Sept. 30, according to its website.

Axel Springer AG, Europe’s biggest newspaper publisher, might face antitrust issues if it decided to invest in ProSiebenSat.1. Before KKR and Permira acquired their stake, Axel Springer’s 2005 takeover bid for ProSiebenSat.1 was rejected by German media regulators.

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