De Mol climbs back in the saddle

Teams with Mediaset to purchase Endemol for $4.6 bil

Dutch billionaire TV producer and Endemol co-founder John de Mol has joined forces with Italy's Mediaset and a group of financiers to buy back the "Big Brother" production company from Telefonica for €3.4 billion ($4.6 billion), it was announced Monday.

The consortium is offering €2.6 billion ($3.5 billion) in cash for a 75% stake in Europe's second-biggest international production venture, and will offer investors a minimum of €25 ($33.90) per share for the outstanding balance, marginally above the €24.65 ($33.38) the Amsterdam-listed stock traded at after the news was announced.

The three-way investment group includes de Mol's investment vehicle Cyrte Fund II, Mediaset's Mediacinco Cartera SL and Goldman Sachs fund GS Capital Partners VI Fund.

Telefonica acquired Endemol in a $5 billion deal in 2000 as part of a major expansion by the telecoms group into media and Internet assets spearheaded by former CEO Juan Villalonga. The strategy was reversed by his successor, Cesar Alierta, who has been trying to offload Endemol since last year.

The Spanish telecoms group is expected to net about €1.4 billion ($1.9 billion) from the deal and use the cash to fuel acquisitions in its core telecoms business.

A tie-up with Silvio Berlusconi's Mediaset will give Endemol productions greater access to the Italian television market and give Mediaset a strong international production asset to buttress the business from the effects of the cyclical advertising market.

"It's a good strategy (for Mediaset) to diversify its revenue," Italian media analyst Patrizio Pazzaglia told Bloomberg. "The deal will give that pinch of diversification needed to steady Mediaset's exposure to cycles."

Telefonica has been trying to find a buyer for Endemol since last year, and hired Lehman Brothers in March to advise on the sale. Other bidders for the company, which brought in revenue of more than €1 billion ($1.4 billion) last year, are thought to have included a consortium backed by former COO Tom Barnicoat, Thomas H. Lee Partners and Apax Partners.

Headquartered in the Netherlands, Endemol has subsidiaries and joint ventures in 25 countries.
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