MFE-MediaForEurope, the Berlusconi-owned pan-European media holding company, this morning announced it has raised its takeover offer for ProsiebenSat.1. The increase comes after the ProSieben board recommended shareholders reject MFE’s previous bid, which the German broadcaster called “inadequate from a financial perspective.”
The media holding company, which is ProSieben’s largest shareholder, has therefore upped the offer, offering shareholders €4.48 per share in cash, and 1.3 newly-issued MFE A shares for each ProSiebenSat.1 share. The latest bid values the German company at around €2.01 billion, which represents a 22 percent premium on ProSieben’s closing share price on Friday.
The upgrade is designed to sway ProSieben shareholders who were unconvinced by the original bid, which came in at the minimum price allowed under German takeover law. The new offer values ProSieben around 50 percent higher than the initial offer of €4.48 per share in cash, and 0.4 newly-issued MFE A shares for each ProSiebenSat.1 share.
“We welcome the announced increase of the offer consideration, which underscores MFE’s long-term investment and continued commitment to ProSiebenSat.1,” said ProSieben CEO Bert Habets. “We will thoroughly assess the increased offer as well as value creation potentials mentioned in the press release of MFE. We support the cooperations across the media industry and a pan-European project, working closely together also with MFE, and look forward to continuing joint discussions.”
“Industrial, not financial”
The lowball bid came after MFE upped its stake in ProSieben beyond the 30 percent threshold that automatically triggered a takeover offer under German law. In response, Czech investment firm PPF offered a higher cash consideration of €7 per share, which remains unchanged in this latest round. The ProSieben board favoured the PPF offer but still called it “inadequate”, and opted to make no formal recommendation to shareholders.
This counter offer prompted MFE to sweeten the deal, and earlier this month, MFE CFO Marco Giordani said the company was considering improving the deal but “won’t do anything crazy.” But in this morning’s statement, MFE CEO Pier Silvio Berlusconi denied the company had lowballed ProSieben shareholders.
“We have decided to increase our offer for ProSiebenSat.1,” he said. “This is not because the initial bid was inadequate, but because, as the leading shareholders, we have supported this industrial project for years. We continue to believe in this project, despite the results of ProSiebenSat.1 making it even more urgent to put a new strategy into place. Our proposal is industrial, not financial. Rather than seeking total control, we are looking for the flexibility to provide clear direction based on a shared vision.”
Reshaping the German market
The announcement follows the acquisition of Sky Deutschland by RTL Group, ProSieben’s main rival in the German-speaking market. François Godard, Senior Media and Telecoms Analyst at Enders Analysis, notes the addition of Sky’s pay-TV footprint to RTL’s business, along with the Netflix partnership in place with Sky.
“It’s a very big change in the outlook for the German market, and it means that ProSieben’s main competitor is doubling in size,” comments Godard.
RTL Group also runs pan-European advertising through its AdAlliance sales house, and Berlusconi has been vocal about the value of unlocking cross-border ad sales by adding the German business to MFE’s broadcasters in Italy and Spain.
“What is needed is a push to build what is still lacking: a strong, locally rooted European group of sufficient size to compete globally,” he said in his statement. “This would allow us to combine markets, strengthen the editorial offering, and generate new value for viewers and investors alike.”
François Godard observes that while the strategy is untested, it “instinctively makes sense” if European broadcasters are to capture multinational budgets from the likes of Google and Meta.
“MFE believes that international consolidation will allow it to sell advertising to international advertisers on a better footing, and to pitch for multinational budgets in a way you can’t as a single country,” he says. “We haven’t seen figures about that, but it makes sense; if you consolidate across borders, you can make agreements with other markets in order to compete with Google and Facebook.”
The ProSieben board will now review the amended offer, and the Executive Board and Supervisory Board will issue statements and recommendations. Meanwhile the acceptance period for shareholders will continue until 13th August.
“All MFE shareholders stand to benefit substantially, with earnings per share growth exceeding 50 percent, and up to 80 percent if the offer is fully accepted,” said Berlusconi. “If there are better alternatives, we are ready to hear them. But to date, ours is the only concrete project for an independent, credible and competitive European broadcaster.”
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