Pair prep for ProSieben auction
Private-equity team, Dogan ready bids as books openCOLOGNE, Germany -- The countdown for the auction of ProSiebenSat.1, Germany's leading commercial broadcaster, is entering its final phase.
Bidders including private-equity consortia KKR/Permira and Apax/Goldman Sachs/Cinven, fund manager CVC and Turkish media giant Dogan will get their first in-depth look at ProSieben's books this week.
The seller is an investment consortium headed by Haim Saban, which holds an economic stake of 50.5% in the German giant and a bigger majority of its voting shares.
Binding bids for ProSieben, which controls five free-to-air channels, are expected by Dec. 12. A sale is expected to be announced before year's end.
A deal with KKR/Permira or Dogan will create a new pan-European player in the broader media and entertainment space. KKR and Permira already control SBS Broadcasting, which operates TV channels in Scandinavia, the Benelux countries and Eastern Europe.
If the KKR/Permira bid succeeds, ProSieben is expected to buy SBS, creating Europe's second-largest broadcaster, behind Bertelsmann AG-controlled RTL Group.
Meanwhile, Dogan, Turkey's leading media conglomerate, also is looking to create a cross-border TV giant by acquiring ProSieben. Its bid of €27 ($35.40) a share is believed to be on the high end of the offers submitted so far, industry watchers said. At that price, Dogan would pay about €2.8 billion ($3.7 billion) for control of the German TV group.
But Dogan could face regulatory barriers in its takeover attempt. German publishing giant Axel Springer, which controls 12% of ProSieben and was prevented this year from buying the broadcaster, recently took a 25% stake in Dogan's Turkish TV operations (HR 11/17). Dogan so far hasn't ruled out the possibility that it could sell ProSieben back to Springer at a later date, something German regulators might oppose.
ProSieben shares traded down Monday, along with most of the market here. The stock closed down 1.3% at €22.22 ($29.16).
ProSieben shares weren't helped by JPMorgan Securities' decision Monday to downgrade its rating on the stock from "overweight" to "neutral." JPMorgan argued that ProSieben will not be able to keep up its recent high rate of growth, especially its gains maintained between 2004-06.
In addition, a sales tax hike in Germany next year will hurt advertising sales, JPMorgan argued, making it hard for ProSieben to match 2006 in terms of revenue and profit.
The parties in the running for ProSieben declined comment on the sales process.