SBS Broadcasting to go private after €1.7 billion sale

Private equity firms Permira and Kohlberg Kravis Roberts & Co have agreed to buy SBS Broadcasting for about €1.7 billion in order to access some of Europe's fastest growing television markets.

The firms said yesterday that they plan to take the company private and take on €170 million of debt in SBS, which has television and radio stations in Denmark, Sweden, Hungary and elsewhere, reaching a total of about 100 million people.

Luxembourg-based SBS said the deal was unanimously approved by a special committee of its independent directors, management board and 22 per cent of the outstanding common shares, including its largest shareholder, cable operator Liberty Global. Shareholders are expected to vote on the deal during a special meeting in October.

If it is approved, they will receive €46 per fully diluted share, a 16 per cent premium to the share price on August 12th, before a report first surfaced about a possible sale of SBS.

Fortis analyst Mariska Zonneveld said that because of SBS's higher margin expectations, its underleveraged balance sheet and potential cost savings, rival broadcasters could value SBS as high as €55 a share, even after taking into consideration a €50 million break-up fee in the agreed deal.

"The large US parties are able to buy SBS as a whole and hence acquire a strong footprint in Europe in one sweep," she said. European broadcasters, she added, would be interested in individual stations in their own markets.

One media banker threw cold water on the notion that US conglomerates Time Warner, Viacom, Disney or General Electric would enter the fray.

"Rupert is probably the only one of the five majors who would have the inclination to go off and buy assets like that in another part of the world for that price," the banker said, referring to Rupert Murdoch, the chairman of News Corp.

RTL, the pan-European broadcaster, and Talpa, the Dutch television channel, were reported to have held talks to buy SBS earlier this year. - (Reuters)