Buyout groups create €10bn European broadcast giant(2)

Buyout firms Kohlberg Kravis Roberts and Permira have been given the go-ahead to complete the merger of their portfolio companies ProSiebenSat.1 and SBS Broadcasting, which is likely to realise a strong return for the two firms.

ProSiebenSat.1, a German broadcaster owned by buyout firms Kohlberg Kravis Roberts and Permira, has acquired Dutch company SBS Broadcasting, which is also owned by the two firms, for €3.3 billion ($4.5 billion).

A spokesperson for ProSiebenSat.1 said the entire acquisition has been fully debt financed with no equity, and the combined enterprise value of the two companies would be around €10 billion.

The buyout groups had to seek a fairness opinion from US bank Citi because they owned both assets. The deal also had to be approved by an independent directors’ committee chaired by former BBC director general Greg Dyke.

At €3.3 billion, the value of SBS has gone up by around 60 percent since KKR Permira bought the business in 2005 for €2.1 billion.

ProSiebenSat.1 was acquired by KKR’s second European fund and Permira’s fourth fund for €5.9 billion in December last year, with the intention of merging the two companies. 

The SBS acquisition will increase revenues at ProSiebenSat.1 by 48 percent, from €2.1 billion to €3.1 billion. The company’s earnings will grow by 43 percent, from €484 million to €691 million.

Guillaume de Posch, chief executive of ProSiebenSat.1 will head the combined group.

Telegraaf Media Groep, which held 20 percent of the SBS Broadcasting Group, has an option to reinvest that will allow it to reacquire the equivalent of 6 percent of ProSiebenSat.1.

Financing was provided by Bank of America, Calyon, Credit Suisse, HypoVereinsbank, JP Morgan, Lehman Brothers, Morgan Stanley and Royal Bank of Scotland.