Sanoma and Talpa Acquires SBS Netherlands

Sanoma and Talpa Acquires SBS Netherlands

SANOMA COOY : acquires Benelux TV operations from ProSiebenSat.1 with prominent partners

Sanoma has agreed to acquire the SBS free-to-air TV assets in the Netherlands and Belgium from ProSiebenSat.1 together with a strong consortium of local partners. For the Dutch transaction, Sanoma has entered into a partnership with Talpa Media. For the Belgian acquisition, Sanoma has partnered with Corelio and Wouter Vandenhaute & Erik Watté. The enterprise value of the transaction totals EUR 1,225 million. The acquisition of the Dutch activities is subject to the approval of the Netherlands Competition Authority (NMa). The entire transaction is estimated to be finalised during the summer.

The Dutch activities of SBS will be acquired together with Talpa Media, the holding company of the TV entrepreneur John de Mol. Sanoma will have 67% and Talpa Media 33% of the shares in the joint company. In Belgium, Sanoma will team with the media group Corelio and Wouter Vandenhaute & Erik Watté, the founders of Woestijnvis, a leading TV production company in Flanders. Each partner will hold a 33.3% share of the company.

The net sales of the acquired companies totalled EUR 404 million in 2010 (pro forma, unaudited) and their operating profit was about EUR 110 million. Sanoma’s share of the new operations will be reported in the Sanoma Media division. For the Netherlands, Sanoma will consolidate 100% of SBS. The current Dutch SBS management will report to a new established Supervisory Board, four members of which are appointed by Sanoma and two by Talpa Media. The Belgian SBS activities will be part of De Vijver, which will be headed by Wouter Vandenhaute. The partners will establish an Executive Board with three members from each company.

“Sanoma has the ambition to build strong media positions in its core markets. With this significant TV acquisition, Sanoma will become a leading media player in the Netherlands and considerably stronger in Belgium. Our strong brands and content know-how from our magazines and our high-class digital operations combined with the SBS TV activities and the creative programming expertise from our partners are perfect building blocks in a transforming media landscape, and allow us to offer new services and solutions across media,” says President and CEO of the Sanoma Group Harri-Pekka Kaukonen. “We believe that by combining our media assets in a new way in the future, we will create a true next generation media offering.”

“I am delighted that we partner with successful TV production companies both in the Netherlands and Belgium. Through Talpa Media and Wouter Vandenhaute & Erik Watté we will have access to premium content. Their know-how in creating internationally successful concepts as well as the best-in-class local productions will enable us to develop the acquired TV channels further,” Kaukonen adds.

“Our magazine, online and mobile portfolio combined with TV activities enable Sanoma Media to provide consumers in the Netherlands and Belgium access to inspiring and enjoyable information and entertainment where, when and how they want,” says Eija Ailasmaa, President of Sanoma Media. “With our new offering, we will be in the forefront of reshaping the media market.”

“A major part of people’s media usage continues to be spent with TV. For advertisers, it offers the most efficient way to quickly reach a large number of consumers. In addition, TV offers an excellent way to reach targeted audiences, increasingly also online,” says President of Sanoma Entertainment Anu Nissinen.

“We are very pleased to complete the sale of these assets to strong and experienced media entrepreneurs. We wish Sanoma and its partners every success,” says CEO of ProSiebenSat.1 Thomas Ebeling.

The leading media player in the Netherlands

In the Netherlands, SBS is the number 2 in the TV advertising market. Its net sales (2010) amount to EUR 316 million. In the acquisition, Sanoma and Talpa Media will obtain TV channels SBS 6, NET5 and Veronica (27% of the TV advertising market) as well as a TV guide business. Together with Sanoma Media’s existing assets, Sanoma will become a leading media player in the Netherlands with a highly attractive multimedia offering. With Talpa Media’s valuable TV expertise and access to best-in-market local content and personalities, SBS will be able to grow its viewing and advertising shares.

“Sanoma has strong brands, making the company a great cooperation partner, the SBS transaction offers three additional TV channels for Talpa Content and Talpa Productions to create and produce our formats for. Besides that, the number of possible combinations with Sanoma magazines and online services is enormous. Both as an investor in the media industry and as a content developer, I am very pleased with this unique opportunity,” states John de Mol.

A leading TV player in Flanders

In Belgium, SBS operates in the Dutch-speaking market, where it is the number 2 commercial TV player. Its net sales in 2010 totalled EUR 88 million. SBS Belgium includes TV channels VT 4 and VIJFTV with a 27% share of the Flanders TV advertising market. The company will be owned by De Vijver, in which Sanoma, Corelio and Wouter Vandenhaute & Erik Watté will have equal ownership of shares. Next to SBS Belgium, De Vijver will contain the production company Woestijnvis and the weekly magazine Humo.

“Sanoma, Corelio and Wouter Vandenhaute & Erik Watté are perfectly complementary partners, and joining forces for the acquisition of the Belgian SBS channels offers us additional guarantees to success. Our alliance will bring new energy to the TV sector, which will be beneficial to both viewers and advertisers,” says the CEO of Corelio Luc Missorten.

Acquisition details

The enterprise value of the acquisition totals EUR 1,225 million. The net sales of the acquired entities totalled EUR 404 million in 2010 and their combined operating profit was approximately EUR 110 million. Sanoma estimates to book about EUR 900 million of goodwill from the transaction. The transaction is expected to have a positive impact on Sanoma’s EPS from 2012 onwards.

Sanoma’s lead financial advisor in the transaction was ING Corporate Finance, with Nordea as co-advisor. Sanoma’s legal advisor was Clifford Chance LLP. Talpa Media’s financial advisor was Bank of America Merrill Lynch and its legal advisor was Allen and Overy.

Financing of the transaction

The activities in the Netherlands and in Belgium will be separately financed. Sanoma will finance its equity investments of EUR 566 million with new debt. As a result of the transaction, the consolidated net debt of Sanoma, including the equity investment and additional consolidated debt, is estimated to increase by approximately EUR 900 million to EUR 1.9 billion. The mandated lead arrangers and underwriters of the financing facilities are BNP Paribas, ING Bank N.V. and Nordea. The transaction does not affect the financing costs of Sanoma’s existing credit facilities, and Sanoma will stay well within its existing financial policy with ample headroom in its current financial covenants.

Sanoma’s outlook for 2011 upgraded

As a result of this transaction, the Sanoma Group’s net sales are expected to increase somewhat and operating profit excluding non-recurring items is expected to increase slightly in 2011. Previously, net sales and operating profit excluding non-recurring items were expected to decrease slightly, if the divestment of movie operations, announced on 21 March 2011, will materialise. Following the transaction, Sanoma Media’s net sales are estimated to increase significantly and operating profit excluding non-recurring items is expected to increase slightly. Previously, it was estimated that the net sales of the Division would be at the 2010 levels and operating profit excluding non-recurring items would decrease clearly.

More information:

A meeting for press and analysts will be held in English by President and CEO Harri-Pekka Kaukonen and CFO Kim Ignatius, at 11.00 (EET) at Nelonen Media, Pursimiehenkatu 26 C, 3rd floor, Helsinki. A webcast of the event can be viewed at Sanoma.com either live or later as on demand. If you want to ask questions during the event, please join the conference call, by dialling +44 (0)20 7162 0025 (Europe) or +1 334 323 6201 (US) and quote the conference code 893979. More material in English and Finnish will be available on Sanoma.com at 8.00 (EET), including e.g. information about the companies and partners, data on the Dutch and Belgium markets as well as the presentation to be used in the press and analyst event.

Sanoma Media will hold press event together with Talpa Media in Amsterdam (Okura Hotel, meeting room ‘De Otter’, Ferdinand Bolstraat 333, Amsterdam) at 13.00 EET (12.00 CET).

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