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Bidding for EM.TV heats up

Kirch is working on an improved takeover offer for the media group. The consortium including private equity funds Morgan Grenfell Private Equity and Hellman & Friedman also remains in contention.

German media group Kirch Gruppe is planning to improve the terms of its takeover offer for EM.TV, as more parties have become interested in the acquisition. Kirch will this week put forward an offer to buy 25 per cent of SLEC the foundation that manages the rights to Formula One motor racing events, from owner Bernie Ecclestone, the Financial Times reports.

Executives at Disney are said to be interested in an opportunity to buy Jim Henson company, creator of the Muppets, if a deal between Kirch and EM.TV collapses. EM.TV acquired the Henson company last year. The newspaper reports that Disney executives are looking at whether the business might come available for acquisition at a reasonable price.

A group which includes Morgan Grenfell Private Equity, the private equity arm of Deutsche Bank, is also considering bidding for EM.TV, in opposition to the privately owned Kirsch group. Tele Munchen Group, a media unit which is 45 per cent owned by EM, heads the consortium considering a counter-bid. It also includes US private equity house Hellman & Friedman.

If a deal does go ahead, it is likely to be structured with TMG offering to take a stake in EM and the private equity firms supplying the cash for EM's 50 per cent stake in Slec, the holding company that owns the Formula One rights. Morgan Grenfell and Hellman & Friedman are both previous shareholders in Slec and the deal is understood to have the backing of motor racing tycoon Bernie Ecclestone, who owns the other half.

It now seems less likely however that Morgan Grenfell will bid. Executives at the private equity company are said to be divided over losses at EM.TV. Morgan Grenfell is said to have made a loss of more than 10 per cent of its $2bn European Partners IV fund, by taking a shareholding in EM.TV. It is suggested that any rifts in the company have been solved, a management buyout can go ahead.

Last week, Deutsche Boerseannounced that it would not take action against EM.TV for selling shares in violation of an agreement with underwriters. The stock exchange found that Thomas Haffa, chief executive of EM.TV, had sold shares in February 2000 in violation of his agreement that he would hold his shares until at least May. He had failed to get written permission from a consortium of underwriters led by WestLB.