The consortium of investors led by Mexican web Televisa submitted a bid of around $11 billion for top Hispanic broadcaster Univision early Friday morning, bouncing back into the game after the group appeared to nearly fall apart earlier in the week.
Sources close to the negotiations wouldn’t specify the amount of the bid, except to describe it as higher than a $35.50-per-share offer made by a competing investor group. They said the bid was fully financed and required no additional outside capital.
What was expected to be an intense bidding war for the U.S.’ fastest-growing broadcaster was disrupted by disarray earlier in the week in the Televisa camp.
The Televisa group — which was considered the strongest consortium in the run-up to the auction — was hobbled by the exit of three of its partners last week. Carlyle, Blackstone and KKR all backed out, apparently, over concerns that Televisa wanted to pay too much for Univision.
While banks have been funding a string of $10 billion-plus buyouts in recent years, rising interest rates appear to have spooked the equity firms. Univision still has the highest growth rates of any non-Internet media company, but many analysts warn its growth may soon begin to slow.
The last-minute exit left Televisa scrambling to hustle its remaining partners, Bain Capital and Bill Gates’ investment firm Cascade Investments, to make up an estimated $1.5 billion shortfall.
Apparently they did so, because a source close to Televisa said no new partners had joined the bid.
Complicating matters, Venezuelan broadcaster Venevision also has opted out of the consortium led by Televisa. The Cisneros Group, which owns broadcaster Venevision, elected “not to participate in the initial phase of presenting a plan or proposal for a transaction with Univision Communications,” a company statement said Friday afternoon.
Cisneros Group rep Antonieta de Lopez declined to give any reason for the pullout. Talks went on until late Thursday night before Venevision decided to bail, she added.
But it was uncertain if the pullout of Venevision had affected the financing of the bid. Earlier in the week, Televisa had been coy about confirming the Cisneros Group was part of the consortium, saying only that it had an agreement with Venevision should Televisa win the bid.
Both Televisa and its erstwhile partner Venevision would be limited by FCC rules on foreign ownership that prevent them from taking a collective stake greater than 25%. If successful, the Televisa bid would require FCC approval, a process that could easily take a year or more.
Some sources said Televisa would have preferred not to have Venevision as a partner anyway, because then it would not be able to further raise its current 11% stake in Univision.
Univision shares closed Friday up 15¢ at $32.95 after days of losses sparked by a lower-than-expected bid from the group of investors led by media mogul Haim Saban and the failure of the Televisa bid to materialize. The slide in its stock price left Univision’s market value at around $10 billion.
Univision owner A. Jerrold Perenchio had been seeking to sell the company for around $40 a share, or $13 billion. He officially put the company up for auction in February. While major media companies including CBS and Disney had expressed some interest in Univision in the past, none ended up presenting offers in the auction.
The bid from the investor group led by Saban apparently was rejected as too low by Perenchio, who reportedly said he wouldn’t settle for less than $38 per share.
The offer from Saban’s group expired Friday, according to sources close to that camp, but it is uncertain if that group will make an effort to beat Televisa’s offer.Sources close to the Saban consortium have said the group is ready to walk away from the table but is counting on the fact that it would face less regulatory scrutiny from the FCC than Televisa’s group.
Saban’s group includes private equity firms Texas Pacific Group, Thomas H. Lee Partners, Madison Dearborn Partners and Providence Equity Partners.
Now, all eyes are on the 75-year-old Perenchio.
David Joyce, senior equity analyst at Miller Tabak & Co., said Perenchio was likely to push Televisa to raise its offer.
“Otherwise, Televisa risks losing Univision, which could opt to either sell off its assets piecemeal or continue as is,” Joyce said.
Philip Remek, senior equity analyst at Guzman & Co., said Perenchio also could try to secure a second offer from the Haim Saban-led group.
(Anna Marie de la Fuente in Hollywood contributed to this report.)