The companies envisage a tie-up with ProSiebenSat.1 emerging as the senior partner, reports The Wall Street Journal with reference to people familiar with the matter. The two players’ combined market capitalisation amounts to roughly €14.4 billion.
Negotiations are at an early stage and could still break down, according to the report. A deal would face several issues including regulatory approval.
The two companies know each other well: In 2005 Axel Springer wanted to buy a controlling stake in ProSiebenSat.1, but the Federal Cartel Office blocked the move, arguing that such a takeover would yield too much power to Springer.
Industry bankers and lawyers, however, say that the rise of digital rivals has changed the competitive landscape and could facilitate a deal, reports the paper. But they added that getting approval could require the companies to shed some assets.
Update: In connection with media reports regarding merger talks with ProSiebenSat.1, Axel Springer issued the following statement: “Although as a basic rule, Axel Springer SE does not comment on the substance of market speculations, the following applies: Axel Springer SE continues to pursue the transformation of the company’s legal form into a KGaA (partnership limited by shares/Kommanditgesellschaft auf Aktien) with the goal to secure the continuation of Axel Springer Gesellschaft für Publizistik GmbH & Co./Friede Springer’s control of the company on a long-term basis and open up growth options. Thus, speculations regarding a relinquishment of control are completely unfounded.”
Broadband TV Views: Jörn Krieger, German editor, Broadband TV News: A merger of ProSiebenSat.1 and Axel Springer makes perfect sense. The combination of financial power, synergies and local market knowledge would put the companies in a better position to fight off competition from US players like Google, Apple, Amazon, Facebook and Netflix.