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Endemol Shareholders, Lenders Remain 'Cool' on Time Warner $1.3 Billion Bid (Sources)

Time Warner Endemol Logo Split - H 2011

Time Warner’s revised all-cash offer isn’t getting “traction,” sources close to the negotiations say.

LONDON – Endemol shareholders and lenders remain cool on Time Warner’s revised $1.3 billion all-cash offer for the global production company, believing that its prospects as an independent entity mean that the business is worth much more, sources said Tuesday.

Time Warner Monday upgraded its initial $1.3 billion cash and shares offer for the producer of Big Brother, Fear Factor, Extreme Makeover Home Edition and Wipeout to an all cash offer in a bid to tempt Endemol’s private equity backers – who are currently trying to restructure its $2.6 billion debt burden.

However, sources close to the negotiations say the price-tag and new offer “isn’t getting any more traction” than their earlier offer, which the shareholders believe fundamentally undervalues Endemol’s global business.

Silvio Berlusconi’s Mediaset, already an investor in the group, is also believed to have tabled an interest in acquiring the complete business.

Sources said that renewed cashflow from significant deals including a renewal for Big Brother with Channel 5 in the U.K. has improved Endemol’s EBITDA prospects after a difficult 2010 and that the business is exceeding its budget targets for the first time in five years.

A restructured debt burden will also cut the company’s hefty interest payments, and allow the business more flexibility.

Time Warner made a non-binding offer for Endemol last month, in a move in line with its stated ambitions to expand its global footprint.

Endemol was founded in 1994 by Dutch media tycoon John de Mol and TV producer Joop van den Ende. The company was acquired in 2007 by Italian prime minister Silvio Berlusconi's Mediaset, Goldman Sachs Capital Partners and John de Mol's investment vehicle Cyrte for €3.4 billion. It now stands at close to €2 billion ($2.6 billion)

In June, Endemol's chief executive Ynon Kreiz, stepped down from the company and shareholders have yet to appoint a successor.

Endemol's board has appointed the group president, Marco Bassetti, and the group CFO Just Spee, to oversee the business. Endemol declined comment beyond issuing the following statement.

"Endemol has received a revised offer from TW. The company has passed it on to the lenders. We remain focused on our discussions with lenders and these have entered the final stages. We are confident that a solution that puts the company on a firm financial footing for the future is now imminent."