Mediawan, the media investment consortium set up by producer Pierre-Antoine Capton, Iliad Telecom founder Xavier Niel and Lazard France chief Matthieu Pigasse, is to acquire French production, channels and distribution player AB Group for €270 million.
The investment group, which said that the acquisition would be a “first step towards building a leading independent premium content platform”, has entered into exclusive negotiations with AB Group’s management, majority shareholder Claude Berda and TF1, which respectively control 13.5%, 53% and 33.5%, to take 100% control of the company.
Berda welcomed Mediawan’s proposal, while TF1 has already confirmed that it has accepted the offer, subject to conditions.
Under the proposed agreement, Capton, who serves as CEO and chairman of Mediawan, would be appointed as chairman of AB Group. Orla Noonan would remain and would join the strategic committee of Mediawan.
Mediawan has said that the acquisition is a first step in a broader strategy of aggregating independent companies involved in cinema or TV content. The group is considering a number of further acquisition opportunities, some of which it said were at an adanved stage of discussion and could bear fruit within weeks.
In relation to AB Group, Mediawan plans to raise €130 million in debt to finance the transaction, with the balance of the purchase price funded by using part of the available funds raised by Mediawan at the time of its IPO and deposited since then on a secured deposit account.
The purchase is subject to approval by two thirds of Mediawan’s shareholders, and will be put to a vote at a meeting on March 13. Subject to regulatory approval by the Luxembourg authorities and consultation with AB Group’s employee representatives, the deal is expected to close in the first half.
Mediawan, which floated on the Paris Euronext exchange last year, is a ‘Special Purpose Acquisition Company’ (SPAC), created by Niel, Troisième Oeil Productions founder Capton, who serves as chairman, and Pigasse, who is Lazard Group’s global head of acquisitions as well as CEO of Lazard France, to acquire one or more operating businesses with an intention to focus on “target businesses or companies with principal operations in the traditional and digital media content and entertainment industries in Europe”.
Other board members include Pierre Lescure, Rodolphe Belmer, Sky Italia content chief Andrea Scrosati and Danone CFO Cécile Cabanis.
in addition to being a producer of series including Section de Recherches and Alice Nevers, le Juge est une femme, AB Group distributes a catalogue of about 12,000 hours of content and owns a portfolio of 19 channels including RTL9, AB3, Sciences et Vie TV and AB Moteurs. The company posted revenues of €158 million last year, and EBITDA of €36 million.
Mediawan said in its presentation that the European content market presented “attractive fundamentals”, with an opportunity to use viewer segmentation to deliver more targeted advertising and distribute content across a wider variety of platforms. It said that European content had proved its attractiveness globally with the success of series such as Gomorra.
Mediawan expects AB Group will deliver EBITDA growth of 3% this year. The investment group said that the deal gave AB Group a proforma enterprise value of €313.7 million or 8.5x EBITDA, meaning that it compared favourably with other media sector deals such as Altice’s acquisition of NextRadioTV or Scripps Networks purchase of TVN.
“With Groupe AB, we have the opportunity to acquire a leading player with a strong potential for growth acceleration through channels, digital and production. Groupe AB is an excellent first step in Mediawan’s objective to create a large dynamic platform to aggregate premium content through future acquisitions, in line with objectives set at the time of the IPO. This platform will aim to aggregate premium traditional and digital media content in all dimensions and provide strong value creation for all stakeholders” said Capton.
“I am very happy that Groupe AB will be the starting point of Mediawan’s growth story by becoming its first acquisition. The proposed transaction is a great opportunity to increase the visibility of Groupe AB while providing it with additional access to financing to accelerate its growth and its international and digital expansion,” said Berda.
Deutsche Bank is acting as financial and lead capital market advisor to Mediawan. JP Morgan and Société Générale CIB are acting as joint capital market advisor to Mediawan.