Goldman Sachs in talks for Clarin stake

Investment bank to acquire part of Argentine media co.

BUENOS AIRES — U.S. investment bank Goldman Sachs Group Inc. on Tuesday confirmed it was in talks to buy a stake in privately held Grupo Clarin, Argentina’s top media company.

Clarin, a budding Latin American media empire with media ranging from an Internet portal to the Spanish-speaking world’s bestselling newspaper, plans to transfer 18% of its stock to Goldman for $500 million, a source close to the talks said last week. It would be a first step by Clarin toward a partial public offering of its stock on the New York market, the source said.

“We are in discussions with Clarin to make an investment in Clarin,” a Goldman spokeswoman said. She declined to comment further.

If Goldman were to invest $500 million in Clarin, it would not, as some media reports have stated, be Goldman’s biggest single investment anywhere in the world to date, a person familiar with the talks said.

The deal comes as Goldman’s venture capital funds search for hot Latin telecommunications and media stocks. Wall Street is eyeing Latin America as a fertile area for media and technology growth. Brazil, with its Portuguese-speaking population of 165 million, is the biggest market. Argentina — with its high literacy rate and per capita income — is viewed as a center for technological development.

Under the proposed deal, Goldman Sachs would invest $500 million in Clarin, after which it would own 18% of the Argentine company. It would then take its share of the company public while Clarin’s owners would retain the remaining 82%.

Ernestina Herrera de Noble, director of the Clarin newspaper and the widow of its founder, is among Grupo Clarin’s top shareholders.

Clarin has annual revenues of about $2.2 billion, making it one of Argentina’s largest companies. It is expanding its media offerings into the Internet through Web portal Ciudad Internet (www.ciudad.com.ar) — which publishes its bestselling Clarin newspaper on the Web — and cable television through top Argentine provider Multicanal. It is seeking extra capital to finance its expansion.

Clarin, too, sees the potential for growth. Latin America, a region of 470 million people, only has around 12 million Internet users — the United States, a nation of 270 million, has 100 million. But Latin American Net users are expected to surge to around 34 million in 2000, a study by the research firm Nazca Saatchi & Saatchi shows.

“Grupo Clarin is not just an Argentine company,” said BCP Securities analyst Walter Molano. “Their goal is to become a pan-Latin-American information company.”

Clarin’s Multicanal cable television company, which has 55.7% of the Argentine market according to BCP, is one of the company’s hottest assets. It provides service in Uruguay and Paraguay and has access to Brazil through the Globo network.