KKR, Permira Make Moves to Exit ProSieben

Buyout shops Permira and Kohlberg Kravis Roberts & Co. are considering selling their stakes in European broadcaster ProSiebenSat1, Reuters reported. KKR and Permira bought ProSieben for 3.3 billion euros in 2006.

(Reuters) – Private equity firms KKR [KKR.UL] and Permira [PERM.UL] are considering moves to sell out of broadcaster ProSiebenSat1, four people familiar with the matter said.

“A placement is realistic as early as the fourth quarter,” one of the people told Reuters, adding it would likely be a multi-billion euro deal.

A sale would create one of the largest listed European broadcasters and make ProSieben, with a market capitalisation of 2.5 billion euros ($3.4 billion), a candidate for Germany’s blue-chip DAX index <.GDAXI>, the sources said.

KKR and Permira bought ProSieben for 3.3 billion euros in 2006 from an investor group led by U.S. media mogul Haim Saban.

They later merged it with European broadcaster SBS to take on rival RTL Group , which is majority owned by media conglomerate Bertelsmann.

That left ProSieben saddled with debt and it is now in the process of selling some SBS assets to pay down debts of 3.3 billion euros as of end-September.

KKR and Permira declined to comment. A ProSieben spokesman said it was up to its owners to comment.

The two private equity companies via investment vehicle Lavena Holding own about 88 percent of ProSieben’s common shares and 18 percent of preferred shares, which lack voting rights. Only the preferred stock is currently listed.

KKR and Permira sold about 3.7 percent of ProSieben’s share capital this month, raising about 194 million euros to reduce debt and boost Lavena’s liquidity.

One source said it was a likely option that the common and preferred stock would be merged before any sale because investors dislike having two different types of shares. “The owners are clearly in favour of this scenario,” the person said.

But one of the sources said said no decisions had been taken yet and other options included selling only the ordinary shares, either by a placing the market or by a sale to another investor.

“The process may take more than just a few months,” the person said.

Consolidating the shares would require shareholder approval. ProSieben’s annual shareholder meeting is scheduled for May 18.

“Due to possible legal challenges after a shareholder decision, the owners would allow at least three months before such a move would be made, making it likely that it (the sale) would fall into the fourth quarter,” the person explained.

“As preferred shares would gain in value — shares are likely to be merged 1:1 and ordinary shareholders would give up their voting right advantage for nothing — it is highly likely that the shareholders will approve the move,” the person said.

A fourth person familiar with the matter said while there was no agenda yet for the meeting, it was likely the owners planned to put the merger on the agenda.

ProSieben chief executive Thomas Ebeling said this week the company would give an update on company’s plans for asset sales when it publishes full-year results in early March.

Dutch media groups Talpa — owned by Dutch billionaire John de Mol — and TMG have both said they would be interested in buying ProSieben’s local TV operations, SBS Nederland, if they came up for sale.

Swedish media company The Modern Times Group was also said to be interested, according to reports. (Reporting by Nicola Leske, Arno Schuetze and Philipp Halstrick. Editing by Jane Merriman) ($1 = 0.7296 euro)