ProSiebenSat1 Takeover Speculation Grows

The German media sector is bracing itself to absorb a possible takeover which could effectively hand the majority of power within the industry to the already highly influential Axel Springer group.

Axel Springer, whose shareholders meet on Wednesday, is expected to pay up to 1.3 billion euros ($1.6 billion) for majority control of ProSiebenSat.1, Germany's biggest commercial broadcaster, it was widely reported on Tuesday.

Axel Springer has offered no denials to this effect and has been increasingly open about its plans to extend its 11.8 percent holding in ProSieben and to buy out some of the investors who snapped up the broadcaster two years ago.

If the industry speculation becomes reality, Axel Springer will combine its television interests with its publishing business, which owns the bestselling tabloid newspaper Bild and the conservative daily Die Welt, to become a hugely powerful concern within the German media sector.

"Axel Springer has said it's interested in increasing its shareholding, and in the right circumstances it would do so," a source was quoted as saying in a report by Reuters. "I think that that's probably about as much as should be read into it at the moment."

Indeed the deal is far from cut and dried. The holding company which controls ProSieben, P7S1 Holding, would lose most of any disposal gains if it sold to before August.

Holding group denies sales talks with Springer

The group of investors, led by US media billionaire Haim Saban, denied it was negotiating a sale with anyone despite a report in Tuesday's Süddeutsche Zeitung newspaper which quoted Springer's chief executive Mathias Döpfner (photo) as saying the media group had set in motion plans to acquire a controlling stake in ProSieben.

"We are not in any sale negotiations regarding ProSieben," P7S1 said in a statement. "We are committed to supporting the company and its management in its continued success and growth."

Much speculation also revolves around the nature of any takeover by Axel Springer regarding an approach from the media group alone or as part of a team. Some observers have spoken about a possibility of Axel Springer joining forces with Hellman & Friedman, which is both part of P7S1 and a Springer shareholder.

"It would make sense if they would side with Springer," a second source was quoted as saying in the Reuters report.

Springer to go it alone or team up for takeover?

The business daily Handelsblatt suggested Springer would avoid having to launch a public offer to buy out minority shareholders by initially buying only 25.1 percent of the broadcaster. Hellman and Friedman would also acquire 25.1 percent. Under German stock law, an investor must launch a public takeover offer to buy out remaining shareholders once the investor's stake rises above 30 percent in a company.

Reports on Wednesday suggested that all private equity investors except Saban and Hellman & Friedman were ready to sell, which means up to 28 percent of ProSieben's capital and 49.5 percent of the votes were available. Together, Springer and Hellman & Friedman would hold just under 50 percent of the capital and 78 percent of the vote if they bought out the others except Saban.

Shares in ProSiebenSAT1 were showing sharp gains on the Frankfurt stock exchange on Tuesday as reports that Axel Springer was planning to take a controlling stake began to surface.

ProSiebenSAT1 shares were up 0.42 euros or 3.03 percent at 14.28 euros in the first half hour of trading in a slightly firmer market.