Televisa bid is in a bind

Co. tries to keep Univision bid together

Televisa was struggling Thursday to piece together a Univision bid after three of its partners bailed.

With Carlyle, Blackstone and KKR out of the picture, the Mexican broadcaster was trying to persuade remaining partners Bain Capital and Bill Gates’ Cascade Investment to pick up all or part of the $1.5 billion in missing dough.

Televisa has around $1.7 billion in cash. But U.S. foreign ownership regs prohibit Televisa from owning more than 25% of Los Angeles-based Univision even if it could pay.

Gates may turn out to be Televisa’s angel. The Microsoft-co-founder and Televisa chief Emilio Azcarraga Jean, who met at the Allen & Co. Sun Valley media conference in the late 1990s, are friends. Gates bought a chunk of Televisa in 2003 and now owns around 5%. (Televisa already owns 11% of Univision; its other partner in the bid, Gustavo Cisneros’ Venevision, owns a 13% stake.)

A Televisa offer was expected, possibly late Thursday, at a price higher than the $35.50 a share offered by Haim Saban’s rival consortium.

“We are confident that we will come forward with the most attractive bid,” a spokesman for Televisa reiterated Thursday, declining to discuss timing or price.

Meanwhile, the spin continued.

Some sources said Univision chief A. Jerrold Perenchio thinks the Saban offer is too low and won’t consider anything under $37, if that. Others insisted the bid hadn’t been formally rejected, that it’s still on the table and that it expires today.

Saban’s posse includes Texas Pacific Group, Thomas H. Lee & Partners, Madison Dearborn Partners and Providence Equity.

Some Wall Streeters think Perenchio’s asking price of $38-$40 a share was a bit rich and he should take the money and run.

Analyst Philip Remek of Guzman & Co. believes Univision is worth about $33 a share. “If they receive an offer between $35 and $36, they should accept it,” he said.

Univision shares slumped 3% more Thursday to close at $32.80. It was down 4.4% Wednesday after Televisa’s bid failed to appear. The bids were due Tuesday.

Takeover speculation had buoyed Univision shares in recent months as it rallied sharply from a 52-week low of about $23 last fall. It formally put itself on the auction block in February.

“By delaying its bid, Televisa has driven Univision’s stock down by about 7% since they let the deadline slip. This works in their favor,” said one industry insider. “Is this deliberate? We have a saying in Spanish: ‘Piensa mal y acertaras,’ or, ‘Think the worst and you’ll get it right.’ ”

The defections by private equity partners have some wondering if the flood of cash they’ve injected in the mergers & acquisition market of late is about to slow down. Equity firms have bought widely, including Warner Music and MGM.

But rising interest rates are making it more expensive to borrow money to finance deals, which appears to have made Carlyle and others skittish about price.

Azcarraga has long plotted how to regain control of Univision, which was founded by his grandfather as the first U.S. Spanish-language TV station in San Antonio, Texas.

Changes in FCC rules forced the Azcarraga family to sell off in 1986, but they bought back in with Perenchio in 1992. Azcarraga Jean took over Televisa in 1998 and moved to renegotiate the long-term programming agreement with Univision.

Televisa has been waiting for this day for years, plotting how to integrate the companies, salivating over the potential profits of an integrated Spanish-language broadcast, cable TV, radio, Internet and music empire.

(Michael O’Boyle in Mexico City contributed to this report.)

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