COLOGNE, Germany -- Axel Springer Verlag Verlag has agreed to acquire ProSiebenSat.1 from a group led by Haim Saban, which had taken control of the firm just two years ago, in a €2.5 billion ($3 billion) deal that will shake up the German media landscape by merging the country's largest newspaper publisher with its top commercial TV broadcaster.

Under the terms of Friday's deal, Saban will stay on as a member of the board at Axel Springer and is expected to head the television division for the group's advisory board.

Springer will buy the entire stake in ProSieben held by Saban's P7S1 Holding, paying €23.37 ($28.88) per share for common shares and €14.10 ($17.43) per share for preference shares. P7S1 Holding also will receive 820,000 Springer shares, a 2.4% stake in the Berlin-based company valued at €7.5 million ($9.3 million).

The agreement, announced by Springer and Saban at a news conference in Munich, gives Springer 100% control of ProSieben's voting shares and 62.5% of the company's capital.

Springer is controlled by Friede Springer, the 62-year-old widow of company founder Axel Springer. She holds 60% of the group's stock and will be majority shareholder of the newly merged media company.

In addition to the $3 billion price tag, Springer will have to pay as much as €1.1 billion ($1.4 billion) to buy out the remaining minority shareholders in ProSieben and €550 million ($680 million) in various additional costs.

With the deal announced Friday, Saban, who, with investment partners Hellman & Friedman, THL/Putnam, Providence, Quadrangle and Alpine, acquired a controlling stake in ProSieben in 2003 for $1.3 billion, has pulled off one of the biggest coups in his business career.

While it is unclear whether Saban will look for new projects in other parts of the world now, he said Friday that he will remain actively involved in the merged German company.

"I will sell my share in German Media Partners and immediately acquire shares in the newly combined company," he said. "I will continue working with the TV management team, and without sounding presumptuous, it is my hope and expectation to be here for a very long time."

Explaining his continued interest, Saban said: "I'm here to stay, because I believe in the potential value creation of the combined companies, I believe in their quality, I believe that together we can build a true European media success story."

Saban also said that he originally called Springer CEO Mathias Doepfner to propose ProSieben take over Springer's stake in the company and, better even, Springer itself.

Doepfner immediately saw the value of a combination, but suggested Springer buy ProSieben as Friede Springer would never give up control, Saban said.

ProSieben has been a success story under his leadership. Since taking over the multichannel group following the bankruptcy of former parent KirchMedia, Saban and company have seen ProSiebenSat.1's shares more than double.

Ratings also have been strong. ProSiebenSat.1's share of the coveted 14-49 demographic inched up 1% in the first half of this year to 30.5%. During the same period, ProSieben's main competition, the RTL Group, saw its share of the 14-49 demo slip 0.6% to 32.3%, ratings group GfK AG said.

"This agreement is a good thing for ProSieben, it will bring a degree of stability to the company. I mean we don't want to be sold off every two years," a top ProSieben source said. "I don't think Springer will change much, the business is working well and executives like (ProSiebenSat.1 CEO) Guilliame de Posch are experienced TV professionals who have proved their worth so I don't expect many heads to roll."

To finance the deal, Springer has set up €1.1 billion ($1.4 billion) in bridge loans and €2.9 billion ($3.6 billion) in long-term credit with Deutsche Bank and Credit Suisse First Boston.

The buyout will set up Springer, Europe's largest newspaper publisher, to take on arch-rival Bertelsmann -- the group that controls ProSieben's local television rival RTL -- for a bigger piece of Germany's €19.6 billion ($23.7 billion) advertising market.

"I expect you'll see Springer bundling its newspaper content -- like the Bild tabloid -- with ProSieben shows such as 'Lost' or 'Desperate Housewives' to pull in more advertising," one leading German TV sales executive said. "But I don't expect a major shift in programming, Springer is unlikely to change much."

In Germany in 2004, Springer and ProSiebenSat.1 had combined sales of €3.8 billion. Bertelsmann had sales of €5 billion.

With worldwide revenue of €17 billion ($21 billion), however, Bertelsmann is still Germany's largest media company by a wide margin. That figure compares with combined worldwide revenue of €4.2 billion ($5.2 billion) for Springer/ProSieben.

However, ProSieben CEO Guillaume de Posch said Friday that Springer will give his firm new growth perspectives. "The two companies together will be well positioned to compete strongly even on an international scale over the long term and to take advantage of growth opportunities, especially in the diversification segment," he said.

Saban was not available for comment.

Before the deal goes through, German media watchdogs have to give the green light. The approval could take months and Springer might be forced to sell off one or more of ProSieben's TV channel's to appease authorities worried the buyout will create a near media monopoly in the German market.

German cartel law stipulates that no television company should control more than 30% of the national market. ProSiebenSat.1 controls about 20% of the German market, so theoretically, there should be no problem. But Springer's dominance of the German newspaper market could be used as an argument to block the deal, industry observers said.

UBS analyst Daniel Kerven said Friday's deal is "good news if you are an ordinary shareholder" of ProSieben.

Georg Szalai in New York contributed to this report.