ProSieben sells SBS divisions for €1.23bn

The Finnish media company Sanoma emerged on Wednesday as the surprise leader of two consortiums buying the Benelux television assets of ProSiebenSat.1, the Munich-based broadcaster for a combined enterprise value of €1.23bn ($1.78bn).

While markets were disappointed that ProSieben did not sell its Scandinavian assets as part of the same strategic review of its non-German businesses, analysts said Sanoma was making a brave play.

ProSieben, controlled by private equity firms Kohlberg Kravis Roberts and Permira, has been seeking to sell SBS Broadcasting since early 2011 in order to reduce debt.

Sanoma, which owns the highest -circulation magazine business in the Netherlands, will take a 67 per cent stake in the Dutch arm of SBS with the remaining 33 per cent owned by Talpa, the holding company of John de Mol, co-founder of Endemol.

In Belgium, the consortium will see equal 33 per cent stakes taken by Sanoma, local media group Corelio, and the Woestijnvis production company.

Thomas Ebeling, ProSieben’s chief executive, said the deal represented “a significant strategic premium on our group trading multiple”. The companies said the price represented a ratio of enterprise value to earnings before interest, tax, depreciation and amortisation of 10.6.

Omar Sheikh, analyst with Credit Suisse, said the sale addressed ProSieben’s biggest issue, which was leverage. The net debt to ebitda ratio is now forecast to come down to 1.9 for 2011 compared with 3.4 this year, he said.

“ProSieben said they had received attractive offers for the Nordic SBS assets, but just not attractive enough,” Mr Sheikh said.

SBS has a 27 per cent share of the Dutch TV advertising market and a 24 per cent share of viewers, with channels including popular brands Veronica, SBS6 and NET5.

In the Dutch-speaking Flanders market, SBS has a 16 per cent share of the TV audience and a 25 per cent of advertising. Together, the Dutch and Belgian operations had 2010 revenue of €404m and earnings before interest and taxes of €110m.

Harri-Pekka Kaukonen, Sanoma chief executive, said the acquisition would allow for cross-promotion between TV, print and online platforms.

Sanoma will finance the purchase of equity with €859m in new debt.

Sarah Simon, analyst at Berenberg, said: “The multiple ProSieben got was a good one. Sanoma are a bit of a surprise, particularly as you would think their main interest would have been in the Scandinavian SBS assets.”

Sanoma was advised on the deal by ING Corporate Finance and Nordea. Bank of America Merrill Lynch advised Talpa. Other bidders included Hellman & Friedman and the Modern Times Group.

The deal will require approval from Dutch competition authorities. It is expected to close this summer. Shares in ProSieben closed down 1.6 per cent at €18.39.