Global private equity firm Apax Partners announced today an agreement to buy a stake in Ronald Lauder’s interest in Central European Media Enterprises (CME) for $190 million (€149 million).
The transaction involves the transfer of a 49.7 percent stake Lauder’s holdings in the Nasdaq-traded company. Lauder and family will retain the balance of the holdings and act as general partner in the partnership. Lauder is an heir to the Estée Lauder cosmetics fortune. He took CME public in 1994 following a private investment in Czech broadcaster TV Nova. Last year, the booming broadcaster, which reaches approximately 84 million people in Croatia, Czech Republic, Romania, Slovakia, Slovenia and Ukraine, saw earnings of $42.5 million, compared to $18.53 million in 2004.
Lauder will remain the company’s non-executive chairman. Apax partners Christian Stahl and Frank Ehmer will join CME’s board of directors.
The rise of CME has been turbulent. The company was delisted from the Nasdaq in 2000. Lauder blamed a hostile business environment in Czech Republic and elsewhere for the company’s woes. It was relisted in 2003 following a private financing from a hedge fund and the settlement of a lawsuit with a local partner.
In a statement, CME chief executive Michael Garin said in a statement: “Our [public] investors should recognize that typically private equity firms seek returns of 2 – 3 times their investment. If Apax is able to realize this objective all investors will realize the same returns for themselves with no investor advantaged over one another.”
Apax will have the opportunity to redeem its Class B shares after three years. The Lauder partnership retains a 64.8 percent voting interest in the broadcasting company, but has a 7.8 percent economic interest.
Stahl and Ehmer work from Apax’s Munich office.