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ProSieben Sells Belgian, Dutch Assets for $1.8B

German broadcaster ProSieben, which is owned by buyout shops Kohlberg Kravis Roberts & Co. and Permira, has sold its Belgian and Dutch assets to a consortia led by Finnish media group Sanoma, Reuters reported. The company will use the proceeds of the $1.8 billion sale to pay down debt. Cleaning up its balance sheet is seen as a precondition to a potential exit by owners KKR and Permira, Reuters reported.

(Reuters) – German broadcaster ProSieben has sold its Belgian and Dutch assets for 1.23 billion euros ($1.8 billion), allowing it to pay down debt ahead of a possible exit by its owners.

ProSieben, owned by private equity firms KKR [KKR.UL] and Permira [PERM.UL], said on Wednesday it had sold its TV and radio channels as well as its print business to consortia led by Finnish media group Sanoma .

The sale comes four years after Munich-based ProSieben bought SBS Broadcasting as it tried and failed to create a pan-European rival to RTL Group .

The deal saddled the German group with a pile of debt, which stood at 3.02 billion euros by the end of 2010, and led Chief Executive Thomas Ebeling to start a strategic review.

Now the broadcaster will be able to significantly reduce its debt and leverage, Ebeling said, without elaborating.

ProSieben aims to improve its ratio of net debt to EBITDA (earnings before interest, tax, depreciation and amortisation) to 1.5-2.5 in the short to medium term, from 3.3 times at the end of last year. It plans to publish more details on its debt with first-quarter results on May 5.

“Finally, ProSieben tunes in and cuts debt,” a Frankfurt-based trader said.

NORDIC BLUES

ProSieben said its strategic review was now complete and removed its Nordic businesses from the auction block.

Silvia Quandt analyst Sonia Rabussier said while the high price was positive there could be some disappointment that ProSieben did not sell its Nordic assets.

“The initial share reaction was positive but the fact that they still have the Scandinavian business in their books is seen as negative by the market. The sale today does not provide enough support for an upside movement,” said another trader.

ProSieben shares rose more than two percent in early market trade but were down 2.2 percent by 0821 GMT, while the German mid-cap index MDAX <.MDAXI> gained 1.3 percent.

Cleaning up its balance sheet is seen as a precondition to a potential exit by owners KKR and Permira.

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

KKR and Permira are considering moves to sell out, people close to process have told Reuters.

“An exit process has been launched,” a person familiar with ProSieben’s thinking said.

He said a placement toward the end of this year was the most likely option for ProSieben as the company was too large to find a single investor.

FINNS EXPAND FOOTPRINT

Sanoma’s acquisitions will enable the Finnish company to expand in digital media, alongside its traditional print and cinema business.

The Finnish group teamed up with Dutch media mogul John de Mol in its bid for the Dutch operations and said the acquisition would give it a leading position in the Netherlands and strengthen its Belgian business.

Sanoma, which publishes Finland’s top daily Helsingin Sanomat and around 300 magazine titles in 13 European countries, was joined by Corelio NV and Waterman & Waterman CVA in the bid for the Belgium TV operations.

“We believe that by combining our media assets in a new way in the future, we will create a true next generation media offering,” Sanoma CEO Harri-Pekka Kaukonen said in a statement.

Analysts have said the company’s significant presence in Benelux markets would make it easier to turn a profit from a deal with ProSieben.

Reuters had on Tuesday reported that Sanoma was the most likely buyer after RTL balked at the price.

(By Nicola Leske and Victoria Bryan; Additional reporting by Christoph Steitz and Arno Schuetze)