Private equity firm KKR buys into Germany’s ProSiebenSat.1

Private equity outfit KKR has revealed that it has acquired a 5.2% stake in German commercial broadcaster ProSiebenSat.1, causing the media giant’s shares to rise on the Frankfurt stock exchange.

KKR told Reuters that it had decided to invest in the broadcaster because it believes that the market is undervaluing the company. It said that it viewed the purchase of the sizeable stake as a “financial investment”.

The investment marks the second time around with ProSiebenSat.1 for KKR. The private equity firm was a co-owner of in German broadcaster alongside Permira, another private equity company, between 2007 and 2014, when the pair sold their remaining 16.6% stakes in the company for €1.3bn ($1.41bn).

KKR’s involvement also comes as ProSiebenSat.1 posted a modest uplift in Q1 revenues at the end of last week. The broadcaster saw revenues rise by 1% to €926 million. Non-TV core advertising revenues accounted for 52% of Q1 sales, with e-commerce arm NuCom Group seeing revenues rise by 15% to €228m. Adjusted EBITDA dropped by 17% to €157m.

Background noise

KKR’s move comes six weeks after former CEO Max Conze left ProSiebenSat.1, following two years in the job. The former Dyson exec saw the company’s share price tumble, while execs departed amid a strategy that included investing $500m in dating app developer The Meet Group.

The company has now outlined new plans to turn away from e-commerce, with an eye on selling its NuCom arm and concentrating purely on entertainment. The broadcaster has also pulled plans to sell its profitable production and distribution arm Red Arrow Studios, as revealed by TBI in March.

KKR’s investment also comes as Italy’s Mediaset has been progressively raising its stake in ProSiebenSat.1.

At the end of last month, the Italian broadcaster purchased an additional 4.1% of the broadcaster1 in a move that took the Italian media group to within a hair’s breadth of the threshold that would trigger a concentration probe.

The acquisition of share by Mediaset Italia gives Mediaset Group as a whole control of up to 24.9% of the voting rights in ProSiebenSat.1, just shy of the 25% threshold that meets the local regulatory regime’s definition of market concentration.

Mediaset has been steadily building its position in ProSiebenSat.1 since last year as the struggling German broadcaster’s stock price has fallen.

Czech Media Invest, backed by Czech entrepreneur Daniel Kretinsky, a company seen as an ally of Mediaset, has also progressively upped its stake in ProSiebenSat.1 and currently holds around 10%.

Speaking to analysts after the Q1 results were published, ProSiebenSat.1 chairman and CFO Rainer Beaujean said that the German broadcaster was not in negotiations with either Mediaset or CMI.

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