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Teutonic torpedo

Bertelsmann plans buyout to stop IPO

Bertelsmann is looking to buy out minority shareholder Group Bruxelles Lambert (GBL) to the tune of e4 billion ($5 billion) in an effort to stop an initial public offering of the family- owned media giant.

The German group is reportedly negotiating with at least one investment bank to set up a debt financing deal allowing the conglom to make a cash offer to the Belgian-based holding company in coming weeks.

Bertelsmann’s majority shareholder, the Mohn family, is said to be pushing for the deal in order to prevent GBL from exercising its right to launch an IPO. The Mohns control 75% of the corporation — the world’s fourth-largest media company.

It remains to be seen whether Bertelsmann will be able to persuade GBL’s owner, industrialist Albert Frere, to accept the offer. Analysts have valued GBL’s 25% stake at around $6.3 billion.

GBL will be able to exercise its right to launch an IPO today,when Bertelsmann also holds its annual general meeting. Bertelsmann has a first-buy right for the stake.

The Mohns have long opposed an IPO because Bertelsmann’s corporate culture places a high value on ethical principles, particularly of partnership and corporate giving, and the Mohns believe this would be compromised by market pressure.

The Financial Times Deutschland, which is partially owned by Bertelsmann subsidiary Gruner+Jahr, reported Friday that the Mohn family is confident Bertelsmann’s credit rating would not fall as a result of a major loan, but added that the group was nevertheless mulling a sale of certain businesses such as BMG Music Publishing to keep down debts.

Company has declined to comment on the report.

The 171-year-old Bertelsmann owns European broadcaster RTL, book publisher Random House, half of Sony BMG and magazine publisher Gruner+Jahr and has annual revenues of around $20 billion with profits of $1.2 billion.

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