By Georgina Prodhan and Jeffrey Goldfarb
FRANKFURT/LONDON (Reuters) - Kohlberg Kravis Roberts & Co. and Permira have agreed to buy ProSiebenSat.1 in a deal that values the German broadcaster at 5.6 billion euros ($7.4 billion), KKR and Permira said on Thursday.
Confirming what people familiar with the matter earlier told Reuters, the firms said they would pay 28.71 euros per common share and 22.40 euros per preference share to buy a 50.5-percent stake from a group led by U.S. media mogul Haim Saban.
They said they would then make a public offer of 22.46 euros per share to buy the remaining preference shares in free float, including those owned by publisher Axel Springer, which abandoned its own takeover bid early this year.
The figure represents the volume-weighted average share price over the three months prior to the takeover offer, and is significantly below ProSieben's closing share price of 23.50 euros on Thursday.
KKR and Permira said they would later consider merging ProSiebenSat.1 with SBS Broadcasting, which they bought last year, and which is strong in Belgium, the Netherlands, Luxembourg, Scandinavia and eastern Europe.
The move would create a Germany-based, pan-European rival to RTL Group, which is owned by German media conglomerate Bertelsmann AG.
One of the sources told Reuters earlier that ProSieben Chief Executive Guillaume de Posch and other top executives were expected to stay on after the deal, which is subject to anti-trust and media regulators' approval, closes.
The deal with KKR and Permira is not expected to face any regulatory hurdles, the source said, and should close in the first quarter of 2007.
Springer's attempt to buy ProSieben for 23.37 euros per share from Saban and his partners -- collectively known as German Media Partners -- was rejected by Germany's competition authorities earlier this year.
German Media Partners own 88 percent of ProSieben's common stock and 13 percent of its prefence shares. Springer owns the remaining common stock and 12 percent of the preference shares, with the rest in public free float.
LONG-TERM SYNERGIES
Analysts said a merger with SBS makes sense because the companies would be able to cooperate on program buying and production as well as developing a single European strategy -- although free-float investors would not benefit short-term.
"Long-term, it looks very positive because of the synergies. It's a good fit between SBS and ProSieben," said an analyst, who asked not to be named.
For Saban and his partners, the deal price would be nearly quadruple the 7.50 euros a share they paid in August 2003 for ProSiebenSat.1, which they salvaged from the ruins of the collapsed media empire of Leo Kirch.
The company's five channels now boast 30 percent of Germany's TV audience and 45 percent of its TV ad market.
A person close to the deal, who asked not to be named, said the company's recovery had put to rest fears that private equity investors -- sometimes disparagingly referred to as "locusts" in Germany -- were only interested in short-term gain.
"In terms of the whole locust debate in Germany, Saban and his partners are handing over a healthier company than when it was taken over, with jobs more secure than ever.
ProSieben's EBITDA more than tripled under Saban's ownership.
"The combined ProSieben-SBS will have headquarters in Munich, so you will have a German company that will be a European champion," the source said.
Shares in rival suitor, Turkish media company Dogan Yayin, which had disclosed it had offered to buy ProSiebenSat.1, jumped 5 percent to 5.00 lira following reports that it was not the winning bidder.
A spokesman for Dogan said its bid had been no higher than that of KKR and Permira, without elaborating.
Another private equity team comprising Apax Partners and Goldman Sachs was a third bidder.
KKR and Permira were advised by Lehman Brothers, Freshfields Bruckhaus Deringer and SimpsonThacher & Bartless LLP on the transaction.
German Media Partners were advised by JP Morgan, Weil Gotshal & Manges and Hogan & Hartson Raue.
(Additional reporting by Mathieu Robbins in London)
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