Springer to buy ProSiebenSat.1 for EUR 2.47bn
5 August 2005, BERLIN - Giant German media group, Axel Springer AG announced Friday it was paying EUR 2.47 billion to buy the nation's largest commercial television group, ProSiebenSat.1 Media AG from U.S. billionaire Haim Saban.
5 August 2005
BERLIN - Giant German media group, Axel Springer AG announced Friday it was paying EUR 2.47 billion to buy the nation's largest commercial television group, ProSiebenSat.1 Media AG from U.S. billionaire Haim Saban.
The friendly takeover of ProSiebenSat.1 by Europe's biggest newspaper publisher will create Germany's second largest media group after Bertelsmann AG and could consequently pave the open the way for a shakeout in the nation's lucrative and intensely competitive advertising market.
Bertelsmann is the owner of ProSiebenSat.1's rival RTL as well as Europe's biggest publishing house Gruner & Jahr and the prestigious New York-based Random House book publishers.
"It is the right transaction at the right time," Springer chief Mathias Doepfner told a press conference in Munich, adding that he expected the new group to represent a serious challenge to Bertelsmann.
Apart from a stable of popular international TV hits aimed at younger, more affluent viewers such as 'Desperate Housewives', 'Friends' and 'Sex in the City' and popular German-made series of entertainment shows, ProSiebenSat.1 also operates a 24-hour news channel, N-24, a classics channel Kabel Eins as well as two TV stations Sat.1 and ProSieben.
In setting out the details behind the takeover bid, Doepfner stressed the financial strength of ProSiebenSat.1 as well as the advertising potential of the merger and the advantages of the two groups linking up in a digital age.
"Alone would have been more difficult for both companies," said Doepfner.
He hoped the deal, which has been the subject of industry rumours for some weeks, would be completed by the end of the year and said there would no change in the company's name.
Friday's announcement by Springer that it was taking a majority stake in ProSiebenSat.1 comes two years after Saban, who has U.S. and Israeli citizenship, led a group of investors to acquire the TV station following the break-up of the debt-ridden empire of Munich-based media mogul Leo Kirch.
Since then, ProSiebenSat.1's shares have soared by 103 per cent allowing Saban, whose fortune was based on his interest in the successful sci-fi action series Power Rangers TV, to sell on a high note.
"The numbers speak for themselves," said Saban, who is to retain a stake in the new Springer-led media group.
Berlin-based Springer, which is the publisher of Germany's influential tabloid Bild and the conservative daily Die Welt as well as a network of prominent magazine titles, already has a 12 per cent stake in ProSiebenSat.1.
Formed by an anti-communist businessman Axel Springer in 1946, Springer now has 150 newspapers in 27 countries and recently moved to carve out a publishing empire in Central and Eastern Europe.
Following Springer's death in 1985, his widow, Friede Springer, assumed control of the company, whose headquarters lie near where the Berlin Wall once stood.
Doepfner said Springer planned to merge the two groups under one management with the new company's television interests representing 40 per cent of total turnover.
Besides diversifying away from a weak newspaper market, Springer's dramatic move into the growing television business will allow the group to link its print advertising operations with its new TV interests.
Germany is the world's fourth biggest advertising market which Doepfner said underscored the considerable potential for advertising growth as an economic upswing emerges in the nation.
The ProSiebenSat.1 takeover would substantially Germany's television business, Hardy Dreier from the Hans Bredow Institute for Media Research at the University Hamburg told the German Press Agency (DPA). "We are on the way to a European television market," he said.
The Springer takeover bid comes as Germany emerges from a protracted period of economic stagnation and a slump in advertising with Springer joining the nation's other media groups in launching a major cost-cutting drive.
However, the mainly cash transaction takeover offer, which still requires approval from Germany's Cartel Office, also comes at a sensitive political time in Germany as the nation gears up for a national election scheduled for mid-September.
Doepfner said Springer proposed buying 100 per cent of the common shares for EUR 23.37 each and 25 per cent of the preference shares for EUR 14.10 each from a holding company P7S1 Holding L.P.
This will mean that Springer will hold 62.5 per cent of ProSiebenSat.1's voting rights.
Saban holds an interest in P7S1 Holding L.P, ProSieben said in a statement.
Subject: German news