Ceconomy to take full control of Media-Saturn, resolving dispute with co-owners

FRANKFURT (Reuters) - German consumer electronics group Ceconomy on Monday struck a deal to take full control of subsidiary Media-Saturn, resolving a long-running dispute with the family of late co-founder Erich Kellerhals.

FILE PHOTO: The logo of Ceconomy AG, Europe's largest consumer electronics retailer is pictured at the company's general shareholders meeting in Duesseldorf, Germany, February 12, 2020. REUTERS/Wolfgang Rattay

Ceconomy is to acquire a 21.62% stake in the subsidiary from the Kellerhals family’s vehicle Convergenta for a total of about 815 million euros ($990 million) in Ceconomy shares, convertible bonds and cash.

As a result, Convergenta will become an anchor shareholder of Ceconomy with a stake of 25.9% stake, which could be increased further via conversion of the new convertible bonds. Convergenta’s intention is to be a long-term shareholder with a stake of up to 29.9%, the company said.

“The reorganization of the shareholding enables us to fully focus on our core operations and strategy implementation,” Ceconomy Chief Executive Bernhard Duettmann said. “We can simplify the governance structure of MediaMarktSaturn and optimize decision-making processes.”

Ceconomy management had battled for years over strategy with Convergenta, which used its stake in Media Markt to block Ceconomy management’s plans. Kellerhals died in 2017, prompting his heirs to attempt to resolve the dispute.

The company had been in talks to resolve the dispute with the Kellerhals family in 2019, Reuters reported at the time, but the talks stalled and were only taken up again this autumn.

Ceconomy is planning to further integrate Media-Saturn leading to cost synergies and to benefit from tax losses carried forward, leading to estimated average tax savings of around 50 million euros per year over the next three years.

Shareholders will be asked to sign off on the deal at an annual general meeting on Feb. 17, but existing anchor shareholders have already said that they support it, Ceconomy said.

Societe Generale advised Ceconomy on the deal, while Nomura advised Convergenta.

($1 = 0.8230 euros)

Reporting by Arno Schuetze; Editing by Ludwig Burger and Sonya Hepinstall