UPDATE 1-Telefonica makes offer for Mediaset's Digital+ stake

Wed Jun 18, 2014 4:46am EDT

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By Robert Hetz

MADRID, June 18 (Reuters) - Spain's Telefonica is offering up to 355 million euros ($483 million) for Mediaset Spain's 22 percent stake in Digital+ in a deal that could eventually give it full control of the Spanish pay-TV group.

The Spanish telecoms firm said on Wednesday it had made a binding offer worth 295 million euros for the Digital+ stake and a further 30 million euros if it gives up its acquisition rights for a stake held by Spanish media group Prisa.

Telefonica, which already holds 22 percent of Digital+, last month agreed with Prisa to buy its 56 percent stake in a deal that is awaiting clearance by anti-trust authorities and Prisa's creditors.

It also said it would pay Mediaset Spain an additional 10 million euros if it successfully finalises the acquisition of the Prisa stake and up to another 20 million euros over a period of four years depending on subscribers to the service.

The Spanish arm of the Italian group Mediaset, which is expected to hold a board meeting in Madrid on Wednesday to discuss the offer, has until the end of the week to make a decision, a source close to the deal said.

Mediaset must decide to sell or keep the stake or exercise an option to make its own bid for Prisa's slice of Digital+.

Selling the stake in Digital+ would have a positive financial impact for Mediaset, whose core advertising business is being hit by an uncertain economic recovery, although it could put at risk its plans to put its pay-TV business into a separate company.

Italian brokerage ICBPI incorporates 0.35 euros in its 4.05 euro price target on Mediaset shares to reflect the spin-off plan, which could create synergies and possibly bring on board fresh resources through the sale of a stake in the new company to a partner.

At 0825 GMT, Mediaset shares were up 1.9 percent in Milan at 3.1 euros per share, while in Madrid Mediaset Spain rose 0.9 percent to 8.75 euros and Telefonica was up 0.52 percent at 12.56 euros. (Additional reporting by Danilo Masoni; Writing by Paul Day; Editing by Tracy Rucinski and David Holmes)

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