Czech group PPF open to teaming up with Berlusconis' MFE on ProSieben bid, sources say

PPF, the second-largest shareholder in ProSiebenSat.1 with a 14.94% stake, is considering a joint bid with MFE-MediaforEurope, controlled by the Berlusconi family, for the German broadcaster. This comes after MFE's initial bid was deemed inadequate by ProSieben and PPF made an offer to increase its stake, complicating MFE's plans; however, no formal approach has been made by PPF to MFE, and both companies are reviewing their options, including a potential increase to MFE's original €950 million offer.

Analysis

Czech investment group PPF, holding a 14.94% stake in German broadcaster ProSiebenSat.1 (PSMGn.DE), is reportedly considering a joint bid with MFE-MediaforEurope (MFEB.MI), ProSieben's largest shareholder with 30.14%. This potential collaboration surfaces after MFE's initial low-ball cash and share offer for ProSieben was deemed 'inadequate' by the target company's board. PPF's recent move to potentially increase its own stake to 29.99% via an offer at a 21% premium to MFE's implied bid price, a proposal welcomed by ProSieben, has complicated MFE's consolidation strategy. While PPF is now open to discussing a joint approach with MFE, no formal contact has been made, and both entities are independently re-evaluating their strategies. MFE is reportedly considering an increase to its original €950 million offer, leveraging its existing 30.14% holding which already necessitates a mandatory full takeover bid under German law, allowing for further open market purchases post-bid lapse. The primary challenge for any joint MFE-PPF endeavor would be reconciling their respective visions for ProSieben's governance and strategic direction, particularly MFE's ambition to lead a pan-European media entity against ProSieben's stated desire for independence.

Key Decisions for Investors

• Investors in ProSiebenSat.1 should anticipate potential share price volatility and further bidding activity, given MFE is reviewing its €950 million offer and PPF has signaled willingness for a higher valuation.
• Carefully assess the feasibility and strategic implications of a potential MFE-PPF joint bid, particularly regarding control and operational integration, which remain significant unresolved points and could impact shareholder value.
• Monitor ProSieben's board response to any revised offers, as their characterization of MFE's initial bid as 'inadequate' and their welcome of PPF's move signal a drive for either a substantially improved offer or continued independence.