Lehman in KirchMedia bid

Lehman Brothers' private equity arm is part of the consortium that looks set to gain control of KirchMedia.

Kirch Gruppe's bankers are finalising a deal that could see Rupert Murdoch's Newscorp, Italian PM Silvio Berlusconi's  Fininvest and Mediaset alongside the private equity arm of Lehman Brothers take control of Kirch-Media, Kirche Gruppe’s TV and rights business.

According to the Financial Times, Kirch will be forced into bankruptcy on 29 March 2002 unless the company is able to secure E200m in emergency bank loans and the completion of an E800m capital increase that will see the Kirch Gruppe effectively relinquish control of Kirch-Media to this international consortium.

Lehman Brothers’ private equity subsidiary is part of the group that is planning to carry out a de facto foreign takeover of ProSiebenSAT.1, Germany's biggest TV broadcaster which is 52 per cent owned by KirchMedia. The deal would be a landmark development for Germany, a country that has resisted large-scale foreign involvement in its media market.

Leo Kirch, founder of the Kirch Gruppe, is thought to be willing to cede control of the media empire in order to stave off the threat off liquidation for the group, which has debts of over E8bn.

The  E800m capital increase will effectively give the consortium a controlling stake in the company, although German politicians are keen to ensure that the firm does not become fully-controlled by foreign investors.