The German media conglomerate Bertelsmann confirmed plans on Thursday to raise money for acquisitions by selling stock in RTL, the biggest commercial broadcaster in Europe.
Bertelsmann, which currently controls 92 percent of RTL, said it planned to reduce its ownership to as little as 75 percent through a public stock offering and private sales to institutional investors. The company said it planned to sell RTL shares on the Frankfurt Stock Exchange “before the summer,” adding to existing listings in Luxembourg and Brussels, where RTL is thinly traded.
No price was given, but Ian Whittaker, an analyst at Liberum Capital in London, estimated that at current market prices, the sale would raise €2 billion to €2.2 billion, or $3 billion to $3.3 billion.
Thomas Rabe, chief executive of Bertelsmann, told reporters last month that Bertelsmann planned to raise money to fuel an expansion in digital media and developing markets, which are growing faster than the company’s core businesses in Europe.
RTL, which owns television channels and radio stations in many European countries, including Germany, France and the Netherlands, has been Bertelsmann’s cash cow for years, but broadcasting is a slow-growing business.
RTL does, however, also own a television production house that Mr. Rabe has identified as a key source of future growth — Fremantle Media, the television production house behind shows like “American Idol” and “The X Factor.”
“We have resolved to make Bertelsmann more growth-oriented, more digital and more international in the coming years,” Mr. Rabe said at a news conference in Berlin as Bertelsmann announced its 2012 financial results last month. At the time, the company, which is privately held by the Mohn family, reported sales growth of 4.5 percent, to €16.1 billion.
One driver of that growth, Mr. Rabe said, was the “Fifty Shades of Grey” book series, published by a Bertelsmann unit, Random House. Bertelsmann recently moved to bolster its book publishing operations by agreeing to merge Random House with Penguin, which is owned by Pearson, a British media company. The companies are still waiting for regulatory clearance in Europe to complete that deal.
Another potential growth area identified by Mr. Rabe is Bertelsmann’s music arm, BMG, which manages the rights to songs by artists like Duran Duran and Johnny Cash but does not operate in the troubled record label business. Bertelsmann this week announced that it had taken over full control of BMG by buying a 51 percent stake from Kohlberg Kravis Roberts, a private equity firm.
Mr. Rabe has said the company plans to spend as much as €3 billion on acquisitions over the next three years. Instead of using it all for one big purchase, he told reporters in Berlin, Bertelsmann would prefer to do a number of medium-size deals.
Other areas of growth, he added, include education, professional publishing and the Fremantle content production business, prompting considerable speculation among analysts about possible takeover targets.
“They clearly don’t want to use all their firepower at once,” Mr. Whittaker said. “There are plenty of niches in digital. If you look at what Axel Springer has done, that should give you a pretty good indication.”
Axel Springer, a German newspaper publisher, has expanded its digital operations by buying medium-size Internet businesses like SeLoger and AuFeminin in France.
While Mr. Rabe last year raised the possibility of an initial public offering of Bertelsmann stock, he said in March that this option was now “off the table for the foreseeable future.” In January, Bertelsmann gave the first indication that it was instead weighing the possibility of reducing its stake in RTL.
Article source: http://www.nytimes.com/2013/04/05/business/global/05iht-bertelsmann05.html?partner=rss&emc=rss