ProSiebenSat.1 acquires SBS

ProSiebenSat.1 Media AG has acquired SBS Broadcasting for €3.3 billion. The deal, which is not subject to any regulatory approval, will be finalized by the end of the month following the signing of a purchase agreement earlier today.

Both SBS and ProSiebenSat.1 are controlled by Kohlberg Kravis Roberts & Co. and Permira, and the integration of both entities will be financed entirely with new syndicated credit facilities provided by a group of banks and institutional debt investors led by Bank of America, Calyon, Credit Suisse, HypoVereinsbank, JP Morgan, Lehman Brothers, Morgan Stanley and Royal Bank of Scotland.

The new Group will continue to bear the name ProSiebenSat.1 Media AG, and be headquartered in Munich. As a result of the acquisition, the Germany-centric ProSiebenSat.1 Group will be active in 13 European countries. The new Group will have 24 FTA TV stations, 24 pay TV stations and 22 radio networks, expanding its reach to more than 77 million European TV households and placing it second among TV broadcasters in the EU after the RTL Group.

Patrick Tillieux, CEOof the SBS Broadcasting Group, will join the executive board of the ProSiebenSat.1 Group as COO, with responsibilities for international TV, radio, print and group operations. ProSiebenSat.1 Media AG CEO Guillaume de Posch will continue to head the enlarged group.

Telegraaf Media Groep N.V., which held 20% of the SBS Broadcasting Group, can become a new strategic shareholder in mid-2008 by excercising an option to reinvest in the new group and acquiring 12% of the voting common stock, and 6% of equity, currently held by Lavena Holding 5. Kohlberg Kravis Roberts & Co. and Permira’s investment vehicle Lavena Holding 5 would then hold 44.7% of the share capital and 76% of the common stock, compared to 50.7% and 88% respectively. The free float of 37.3% of the capital stock would remain unchanged.

Synergies from the merger are to be between €80-90 million per year, two-thirds of which come from cost savings and one-third from additional revenue potential. The full value of the projected synergies is expected to be realized as of 2010.

On the basis of a pro forma calculation for 2006, the SBS acquisition will increase revenues by 48%, from €2.1 billion to €3.1 billion. EBITDA will grow by 43% from €484 million to €691 million. SBS’s recurring EBITDA in 2006 was €207 million.In Q1 2007 SBS showed EBITDA growth of €16 million, or 79%, to €36 million.