Poland’s main satellite TV provider Cyfrowy Polsat is to will buy Telewizja (TV) Polsat, its parent company, for approximately PLN3.75bn (US$1.3bn) in a cash and share deal.
Cyfrowy will pay PLN2.6bn (US$900m) in cash and the rest will be in the form of…
Poland’s main satellite TV provider Cyfrowy Polsat is to will buy Telewizja (TV) Polsat, its parent company, for approximately PLN3.75bn (US$1.3bn) in a cash and share deal.
Cyfrowy will pay PLN2.6bn (US$900m) in cash and the rest will be in the form of 80 million shares valued at PLN 14.37 (US$5) each. The company said it would assume all assets and liabilities of TV Polsat, including net cash of PLN150m (US$52m).
The acquisition values TV Polsat at 11.8 times 2010 EBIDTA, according to a company statement.
To finance the acquisition, the DTH platform is currently negotiating a bank loan of PLN1.4-1.6bn (US$485-554m), a bridge facility of PLN1.2-1.4bn (US$416-485m) and a revolver of PLN 200m (US$69m). The facilities will have a maturity of about 5 to seven years, and will likely be refinanced in part or in whole in 2011.
Following the transaction, total net debt will reach 4x combined 2010 EBIDTA but is expected to be reduced to 2x combined EBIDTA within three years.
Cyfrowy’s head of investor relations told SatelliteFinance that the transaction is expected to close in March 2011 but declined to comment on the advisers.
TV Polsat, Poland’s second largest television channel, was founded in 1992 by Polish billionaire Zygmunt Solorz-Zak. Along with associate Hieronim Ruta, Solorz-Zak owned 100% of TV Polsat both directly and through investment vehicles Karswell Ltd and Sensor Overseas Ltd. The two men also own a majority stake (65.2%) in Cyfrowy via their investment vehicle Polaris Finance with the rest being held by public shareholders.
While Polaris’ holding in Cyfrowy will be diluted to 50.2% following the sale, Solorz-Zak and Ruta actually increase their ownership due to their 100% control of TV Polsat. The 80 million Cyfrowy shares that are part of the transaction will give the pair an extra 23% in equity meaning their holding will now amount to 73.2%. The other 26.8% will be owned by public shareholders.
Through this deal, the two Polish entrepreneurs net themselves a significant cash dividend of around PLN2.6bn (US$900m) as well as create Poland’s largest media company by sales. According to Cyfrowy, the companies generated combined revenues of PLN2.3bn (US$800m) in 2009, greater than the PLN2.2bn (US$765m) posted by Telewizja Polska, Poland’s public broadcasting corporation.
The transaction comes as competition is intensifying in the Central and Eastern European DTH market. European mobile operator T-Mobile is notably pushing ahead with the development of new DTH platforms in both the Czech Republic and Croatia.
In Croatia, incumbent T-HT, a T-Mobile subsidiary, is reportedly looking to start a satellite platform, with tests underway on Eutelsat Sesat (16E) to distribute 17 encrypted channels. The country already has two DTH platforms: Digi TV (owned by Romanian company RCS&RDS) and Total TV (run by Serbian cable operator SBB).
Meanwhile in the Czech Republic, another subsidiary of T-Mobile, T-Mobile Czech Republic, is also expected to launch a DTH service using the infrastructure of Skylink, another platform operating in the country, according to local media reports.
Since last month, Austria, too, has a new DTH platform. Called AustriaSat and owned by M7, the satellite platform is expected to offer 14 channels from several broadcasters, including RTL and MTV, via Astra (19.2 E).
