Determined to keep the world’s fourth largest media conglom in private hands, Bertelsmann’s majority shareholding Mohn family is buying back a 25% stake in the company from Belgian holding Groupe Bruxelles Lambert for $5.7 billion, giving it 100% control of the corporation.
Move leaves the Mohn family in full control via its own stake as well as that of the Bertelsmann Foundation, which it oversees.
Also, Bertelsmann said it plans to sell off its BMG Music Publishing division to repay an initial loan provided by several banks to finance the deal.
Company will invite selected bidders for the music division beginning in June and is aiming to repay the credit line over the next 12 to 18 months.
GBL, owned by Belgian industrialist Albert Frere, announced in January its plans to float the stake, which had been valued at around $6 billion.
The Mohns have long opposed an IPO, however.
Company was established in 1835 by Carl Bertelsmann as a publisher of hymn books, and Bertelsmann’s corporate culture places a high value on ethical principles, particularly of partnership and corporate giving — a tradition the Mohns fear could be compromised by market pressure if the company were to go public.
Bertelsmann CEO Gunter Thielen said, “The executive board and the majority shareholder are convinced that the share buyback is the best option to secure the continuity and the successful development of the company on the basis of our corporate culture of partnership.”
Describing the purchase price as “reasonable,” Thielen sought to dispel speculation that the group would be weighed down by debt, stressing the deal will not affect its financial standing or its ability to further invest in growth.
“The company will maintain full strategic flexibility to further develop its businesses. Bertelsmann has proven time and again during its long history that it has the ability to expand internationally and build leading market positions.”
Thielen added the conglom is “in an excellent position and will achieve record results in 2006.”
Liz Mohn, wife of Bertelsmann patriarch Reinhard Mohn and the family spokeswoman, said the buyback “guarantees the independence of the company and its lasting and sustained development on the basis of our proven corporate culture. It secures the greatest possible freedom for the executive board to manage the business.”
In recent years Bertelsmann has expanded its TV holdings across Europe: RTL owns 34 TV channels and 30 radio stations in 11 countries, with major webs in Germany, the U.K., France and Russia. It also owns Random House, the world’s leading book publisher, with bestselling titles including “The Da Vinci Code.”