UPDATE 5-ProSieben sells Dutch, Belgian ops for $1.8 billion

Wed Apr 20, 2011 10:26am EDT

Related Topics

* Assets sold for 1.23 billion euros to Sanoma consortia

* ProSieben says to keep Nordic ops

* ProSieben shares down 1.2 pct, MDAX up 2.2 pct

* Sanoma up 1.9 percent

(Adds background)

By Nicola Leske and Victoria Bryan

FRANKFURT, April 20 (Reuters) - German broadcaster ProSieben PSMG_p.DE has sold its Belgian and Dutch assets for 1.23 billion euros ($1.8 billion), allowing it to pay down debt ahead of a possible exit by its owners.

ProSieben, controlled by private equity firms KKR [KKR.UL] and Permira [PERM.UL], said on Wednesday it had sold the unit to consortia led by Finnish media group Sanoma (SAA1V.HE).

Munich-based ProSieben bought SBS Broadcasting four years ago, but failed in its ambition to create a pan-European rival to RTL Group AUDK.LU.

The deal saddled the German group with debt that amounted to 3.02 billion euros by the end of 2010, and led Chief Executive Thomas Ebeling to start a strategic review.

ProSieben aims to improve its ratio of net debt to EBITDA (earnings before interest, tax, depreciation and amortisation) to 1.5-2.5 times in the short to medium term, from 3.3 times at the end of last year.

DZ Bank analyst Christoph Bast said ProSieben's high debt had prevented it from investing in the growing area of online businesses -- a sector where it can now expand.

"Furthermore the significantly lower leverage should also enhance ProSieben's position for negotiating new financial planning in 2014," said Bast, who anticipates ProSieben will reduce its net debt/EBITDA multiple to roughly 2.0 this year.

NORDIC BLUES

ProSieben said it has completed its strategic review, and no longer plans to sell its Nordic assets. [ID:nLDE73F010]

Silvia Quandt analyst Sonia Rabussier said while the high price was positive, there could be some disappointment that ProSieben did not sell its Nordic businesses.

ProSieben shares rose more than 2 percent in early market trade but were down 1.2 percent by 1416 GMT, while the German mid-cap index MDAX .MDAXI gained 2.2 percent. Sanoma shares were 1.9 percent higher.

Cleaning up its balance sheet is seen as a precondition to a potential exit by owners KKR and Permira.

The two private equity companies own about 88 percent of ProSieben's common shares and 18 percent of preferred shares, which lack voting rights, via investment vehicle Lavena Holding. Only the preferred stock is currently listed.

KKR and Permira are considering moves to sell out, people close to process have told Reuters. [ID:nLDE70R0X8]

"An exit process has been launched," a person familiar with ProSieben's thinking said, adding that a placement towards the end of this year was the most likely option for ProSieben as the company was too large to find a single investor.

A source close to one of the owners ruled out an exit at the current price, saying a sale would depend on the development of the advertising market, which was hard to predict.

FINNS EXPAND FOOTPRINT

Sanoma's acquisitions will enable the Finnish company to expand in digital media, alongside its traditional print and cinema business.

It teamed up with Talpa, which bundles the media activities of Dutch media tycoon John de Mol, in its bid for the Dutch operations and said the acquisition would give it a leading position in the Netherlands and strengthen its Belgian business.

De Mol -- who ranks 11th on the Dutch rich list, ahead of the royal family -- created the international hit television series Big Brother in the late 1990s. He said that the deal with Sanoma would allow him to try out various new programming ideas.

Sanoma's head Eija Ailasmaa told reporters in Amsterdam she expects the deal to close in June or July following the approval of the Dutch competition authorities, and said the group had no plans for more big media takeovers in the short to medium term.

Sanoma, which publishes Finland's top daily Helsingin Sanomat and around 300 magazine titles in 13 European countries, was joined by Corelio NV and Waterman & Waterman CVA in the bid for the Belgium TV operations.

In a call with journalists, Sanoma CEO Harri-Pekka Kaukonen acknowledged that the price was high but said that "the operations are profitable, there's always some kind of premium I think it's justified".

Sanoma will also see a slight increase in operating profit this year thanks to the deal, he said.

Analysts have said the company's significant presence in Benelux markets would make it easier to turn a profit from a deal with ProSieben. [ID:nLDE7371FK] (Additional reporting by Christoph Steitz and Arno Schuetze, Gilbert Kreijger in Amsterdam; Editing by Louise Heavens) ($1=.6984 Euros)

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