For the duration of MFE-MediaForEurope’s protracted pursuit of ProSiebenSat.1, the German broadcaster has resisted the Italian media giant’s advances. And as MFE has stepped up its shareholding and advocated for moves which would clear the way for a takeover (such as selling off assets outside of ProSieben’s core media business), ProSieben’s Board has pushed back in the other direction. It was no surprise therefore when MFE made a full takeover bid that the Board advised shareholders to reject the offer.
But that resistance now appears to have ended. Last week MFE submitted a new offer, which valued ProSieben around 50 percent higher than the previous offer. Today, ProSieben’s Executive Board and Supervisory Board have recommended that shareholders accept the offer, stating that their own analysis, alongside that of Morgan Stanley and Goldman Sachs, finds the offer to be adequate.
While the two Boards’ endorsement of the offer doesn’t mean the deal is guaranteed to pass, it does remove a major hurdle, smoothing the path for MFE’s takeover. The acceptance period for the raised MFE offer is set to expire in a week’s time unless extended by statutory law, and will be subsequently subject to an additional acceptance period of two weeks.
A change in tone
MFE executives have spoken about the company’s ambition to build a pan-European media giant for around a decade, citing the need for cross-continent scale in order to more effectively compete with the largely US-based tech and streaming giants. It’s core to the company’s overall strategy, as signalled by the company’s rebrand from Mediaset to MFE-MediaForEurope. And since MFE first acquired a nearly ten percent stake in ProSieben back in 2019, rumours have swirled that the Italian business might look for a full takeover.
At the time, ProSieben’s then-CEO Max Conze talked down the prospects of such a move, disagreeing with MFE’s logic. “I worry that if you spend your time in combining pretty unwieldy and big companies, you’re going to get sucked into years of structural work that doesn’t really build the future,” said Conze at the Morgan Stanley European Technology, Media and Telecoms conference in Barcelona.
But while ProSieben has continued to resist MFE’s overtures, the tone of that resistance has changed. When the two Boards advised that shareholders reject MFE’s initial offer, they spoke against the financial value of the proposed deal rather than the logic behind the merger. And when Czech investment fund PPF made a separate partial acquisition offer a few months back, the German broadcaster’s Boards took a neutral stance, signalling an openness to a takeover bid, should the offer be high enough.
Today’s recommendation partly reflects the value of MFE’s revised offer, which represented a nearly 25 percent premium over ProSieben’s share price at the time the Boards put together their recommendation. It’s also dependent on MFE achieving the annual cost synergies it is targeting within four to five years, which would require a full legal integration of ProSieben into MFE.
Competition at home and abroad
In the statement issued by the two Boards, they do also acknowledge the broader strategic logic behind the acquisition. The Boards say they share MFE’s view that “the current European media landscape is characterised by significant challenges for linear broadcasting offerings, in particular due to shifting consumer habits, the rise of streaming giants, other technology challengers and accelerating structural changes in the broader media industry”.
As Enders Analysis’s François Godard previously told VideoWeek, recent moves in ProSieben’s home market may be a factor in ProSieben’s willingness to entertain a takeover bid. RTL Group, one of ProSieben’s major rivals, recently acquired Sky Deutschland, roughly doubling its size in the German market.
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