EC blesses ProSiebenSat 1 sale

Commission gives go-ahead to equity firms

The European Commission on Thursday gave private equity companies Kohlberg Kravis Roberts and Permira the greenlight to buy ProSiebenSat 1, Germany’s largest private broadcasting group, from Haim Saban’s German Media Partners, in a deal worth some $7.2 billion.

The announcement in Brussels came just hours after ProSiebenSat 1 said in Munich that higher advertising sales in 2006 had boosted core profit by 16% and expressed confidence about further gains in sales as well as earnings in 2007, when it expects German TV advertising revenues to rise some 2% to 3%.

Net profits rose 9% to $316 million. Earnings before interest, taxes, depreciation and amortization were $635 million in 2006 on sales of $2.7 billion, an increase of 5.8%.

Following their successful e3 billion ($4 billion) bid in December for a controlling stake in ProSiebenSat 1, the private equity companies acquired 50.5% of the broadcast group’s share capital including 88% of common shares and 13% of preference shares.

KKR and Permira last month launched a public offer for the remaining shares. The private equity groups are offering minority shareholders $29 per listed, non-voting preference share and $37.25 per common voting share.

The new owners plan to merge ProSiebenSat 1 with pan-European broadcaster SBS and buy rivals to create one of the biggest TV empires in Europe, challenging Bertelsmann’s RTL Group, another pan-media European giant based in Germany.

SBS owns TV and radio stations across Europe including in Denmark, Hungary, the Netherlands and Finland. KKR and Permira bought it in 2005 for about $2.5 billion.

The greenlight from Brussels for ProSieben was expected but welcome nevertheless.

“The Commission concluded that the transaction would not significantly impede effective competition” in the European Economic Area or any substantial part of it, the EU’s regulatory arm said.

ProSiebenSat 1 said that it planned to raise its dividend slightly on the back of the profit rise, to $1.16 per preferred share and $1.14 per common share.

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