Berlusconi-backed MFE lifts bid for Germany's ProSieben in European TV drama

By Elvira Pollina and Alexander Hübner

MILAN/MUNICH, July 28 (Reuters) - MFE-MediaForEurope (MFE) MFEB.MI, the TV group controlled by Italy's Berlusconi family, on Monday improved its cash-and-share offer for German peer ProSiebenSat.1 PSMGn.DE as it pursues plans to build an advertising-funded pan-European broadcaster.

With streaming giants such as Netflix NFLX.O and Amazon Prime Video AMZN.O encroaching upon legacy broadcasters, MFE sees cross-border deals as vital to withstand competition.

"What is needed is a push to build what is still lacking: a strong, locally rooted European group of sufficient size to compete globally," MFE Chief Executive Pier Silvio Berlusconi said in a statement.

MFE boosted the share component of its initial bid, which had been pitched at the minimum price allowed by law, and is now offering 1.3 billion euros ($1.5 billion) for the 70% of ProSieben it doesn't already own, with a 45% increase in the bid's value based on Friday's closing prices.

The improved offer is higher than an all-cash counter-bid by ProSieben's second largest investor PPF.

MFE is now offering 1.3 MFE A MFEA.MI shares for each ProSieben share tendered, with the cash component unchanged at 4.48 euros.

Shares in ProSieben jumped 11% on Monday to 7.87 euros, while MFE A shares fell 5.6%, which implies the bid values each ProSieben share at 7.94 euros.

Czech conglomerate PPF, which owns private TV stations across six Eastern European countries, in May offered 7 euros to double its stake in the German broadcaster to up to 29.99%.

A source familiar with PPF's thinking said MFE's bid remained unattractive for many ProSieben investors, given it contained just more shares and with lower voting rights compared with MFE's privileged shares. PPF declined to comment.

Take-up of both offers has been negligible so far.

BERLIN TUNES IN

MFE's bid for Munich-based ProSieben has drawn scrutiny from the German government.

"A majority shareholding by MFE should not lead to a restriction of journalistic and economic independence and should not jeopardise Germany as a business location," a German government spokesperson said on Monday, echoing concerns expressed by Culture Minister Wolfram Weimer.

In announcing the improved offer on Monday, the MFE CEO, the son of the late former Italian prime minister Silvio Berlusconi, said the group would stick to pluralism, freedom of information and employment protection.

Berlusconi is due to meet the culture minister in Berlin after the summer break to discuss ProSieben. A person familiar with the matter said MFE had informed Berlin of its plan to raise its bid ahead of a weekend board meeting.

MFE, which first invested in ProSieben in 2019, runs commercial TV operations in Italy and Spain.

In an analyst presentation seen by Reuters, MFE pegged up to 419 million euros of additional operating profit within four years. Revenue initiatives, such as building a common platform for global advertisers, would generate nearly 46% of the upside.

In a battle to catch up with U.S. heavyweights, European broadcaster RTL, which has large TV operations in Germany, last month announced an agreement to buy the local operations of pay TV group Sky.

ProSieben, which has so far strived to remain independent, on Monday welcomed MFE's improved offer, adding its board would formulate a proper opinion in due course.

CEO Bert Habets said the company is supportive of "a pan-European project, working closely together also with MFE", adding it would assess value creation potential mentioned by MFE.
($1 = 0.8559 euros)