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TMG takes ProSiebenSat.1 stake

Dutch group expects $310m writedown on deal

BERLIN — Dutch publisher Telegraaf Media Groep (TMG) has taken a 12% stake in ProSiebenSat.1 for Euro 377 million ($587 million) after shareholders of the pan-European broadcasting group exercised a put option forcing the purchase.

Deal is a major win for private equity investors Permira and KKR, who control ProSiebenSat.1’s holding company Lavena Holding 4 GmbH.

While the publisher was forced to pay a hefty $44.72 per share, considerably more than ProSiebenSat.1’s current share price of $8.56, Telegraaf chief exec Ad Swartjes said the deal would help the company become less dependent on print media.

Telegraaf last year sold its 20% stake in European broadcaster SBS to Lavena for $674 million in a deal that gave Telegraaf two seats on ProSiebenSat.1’s supervisory board, a call option at Euro 32.61 ($50.79) and Lavena a put option at Euro 28.71 ($44.72) — a range comparable to ProSiebenSat.1’s share price at the time. However, the broadcasting group has seen its share price plunge more than 80% over the past year.

In May Telegraaf said it would not exercise its call option, allowing Lavena to exercise its put option on Friday.

The Dutch company, which said it would finance the purchase with existing cash assets, said it expected a writedown of between $230 million and $310 million on the deal due to the current economic climate and continuing credit crisis.

Despite the high price and impact the deal will have on hits bottom line, Telegraaf maintained that the engagement was a smart strategic move.

“TMG has every confidence in the long term growth and synergy potential of the newly formed ProSiebenSat.1 and SBS combination,” Swartjes said.

“We therefore view our participation in ProSiebenSat.1 as an important step that fits into our strategy of becoming less dependent on print media.”

Telegraaf shares fell 9.5% to $26.72 on news of the deal on Monday.

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