Confirmed: MTG buys €30m Trace stake

Modern Times Group has entered into an agreement to buy youth-orientated Europe-based channel group Trace for €30 million, confirming a deal TBI revealed news of more than two weeks ago.

Numerous buyers circled the business after it put itself up for sale but Scandinavia-based MTG has won out and will now take a 75% stake in a deal that gives Trace an enterprise value of €40 million. It takes the shares from Citizen Capital, Entrepreneur Venture, NextStage and company management, the latter of which will retain a 25% stake.

Trace offers channels such as Trace Sport Stars and Trace Urban via third party distribution deals in more than 160 territories worldwide, including all 55 in Africa, where MTG is rapidly expanding.

Trace co-founder Olivier Laouchez will remain as company chairman and CEO, while other senior management figures will remain in their roles.

Revealed in the deal today were figures that show Trace has recorded 23% compound annual net growth in the five years to the end of 2013 and also reported net sales of €19.3 million for fulll year 2013. The Paris-based company generates almost half of its revenues from Africa and emerging markets, meaning it is well placed for further growth as those territories’ media sectors expand, and has 37 million paying subscribers, up from 27 million at the end of 2012.

The deal is subject to approval from French media authorities and MTG said it would consolidate Trace’s results into group accounts once the transaction has closed.

For MTG, the deal continues an acquisitive spree that has already seen it dish out for UK-based programming distributor DRG and Scandi producer Novermberfilm. TBI understands at least one other major deal could close this year.

MTG’s executive VP, African operations Joseph Hundah said of the Trace deal: “Trace is a cool and contemporary entertainment brand, and one of the leading youth brands in Africa. It fits perfectly with what we are doing in Africa and, more broadly, with our linear and digital operations, as well as ourt content production houses. This deal is another key milestone in our international expansion and provides us with footholds from which we can expand even more in Europe, South America, Asia and Francophone countries around the world.”

Laouchez added: “MTG has the right set-up and vision to make Trace a leading and cool entertainment multimedia brand for the youth generation worldwide. We are extremely confident that the synergies, resources and opportunities provided by MTG and its great team will make us achieve this goal faster and better, while preserving Trace’s unique identity and entrepreneurial dynamics.”