Berlusconi's audiovisual group prepares to absorb Mediaset

Mediaset Spain headquarters, in Madrid.

Reuters

Mediaset España opens this week a new and decisive phase in its merger process with Media for Europe (MFE), the audiovisual group controlled by former Italian Prime Minister Silvio Berlusconi, owner of 48% of the transalpine conglomerate through Fininvest.

The extraordinary shareholders' meeting has been called for Wednesday with a key point: the absorption of Mediaset, a group that operates the Telecinco and Cuatro channels, among others.

Thus, a pan-European information and entertainment media giant will be born from a strategic, operational and industrial perspective.

MFE, which also owns 25% of the German ProSiebenSat.1 and has established its registered office in Amsterdam, aspires to gain scale with an eye toward strengthening financial resources and technological investment in order to be able to compete in local circuits from a better position and, at the same time, expand to other European markets.

Framed in the so-called Common Cross-Border Fusion Project, the process by which MFE engulfs Mediaset has been long and eventful.

In January, it received the approval of the boards of directors of both entities, a year after the first merger attempt failed due to the failure of the takeover bid that the parent company launched for the package of 44.3% of Mediaset España that it still did not control. .

That offer was raised as "a great opportunity" for the shareholders, but it was unsuccessful as it did not reach the objective of adding at least 90% of the capital (it stayed at 82.92%).

At this week's shareholders' meeting, MFE aspires to gain full control of the company chaired by Borja Prado, which will cease to exist as an independent company.

The Italian

intends, according to a communication sent to the National Securities Market Commission (CNMV), to review the organizational and operating model in order to "capture new growth opportunities, allow agile decision-making and greater responsibility". , but maintains that the merger does not contemplate any transfer of employees and managers and is committed to maintaining operations and production activities in the respective countries.

This will be the first shareholders' meeting in more than two decades in which Paolo Vasile, CEO for the last 23 years and one of the bastions of the economic benefits amassed by Mediaset in that time, which exceeds 3,700 million euros, will not be present. .

This new stage coincides with a notable loss of audience for Telecinco, the group's main channel, a situation to which the team led by the CEO Alessandro Salem, who assumed part of the functions that were in the hands of Vasile, intends to give the back with a revamped programming strategy.

Its goal is to make "family, respectful and happy" television, where entertainment sets the pace.

The combination of the Italian and Spanish businesses will boost synergies,

The exchange ratio agreed upon in the merger process assumes seven MFE A shares, with the same characteristics and with the same rights as the Mediaset España A shares existing at the time of issue for each share of the subsidiary.

As reported by both entities, the exchange has been calculated on the basis of several valuation methodologies and references for the shares of MFE and Mediaset España, such as the discounted free cash flow, together with the multiple of pairs, the market prices of securities and analyst ratings.

Shareholders who vote against the merger may exercise their separation rights.

The redemption price payable will be 3.26 euros per share,

For Berlusconi, the merger will open the way for an integrated operating strategy and centralized decision-making.

MFE points out that its pan-European profile will help expand business options and thus take advantage of being the first agent to take this step in the media environment.

The company estimates that "internationalization, economies of scale and the ability to offer products adapted to technology and quality content" are key factors to compete in the current media ecosystem, marked by a decline in linear television and a strong advance of video platforms on the Internet such as Netflix, HBO or Amazon Prime.

In Spain, the new transnational giant has seven free-to-air television channels (Telecinco, Cuatro, Energy, FDF, Be Mad, Divinity and Boing), which last year accounted for 26.2% of the audience, representing a point less than Atresmedia, its main competitor, which also has one less channel.

Along with the open channels, Mediaset has a stake in television production companies, publishes the digital newspaper

, manages a news agency, operates the advertising business and has a film division.

It closed last year with a profit of 178 million euros.

Following the merger, MFE's board of directors will remain unchanged.

Its president will continue to be Fedele Confalonieri and Pier Silvio Berlusconi will act as CEO.

The company controlled by the Berlusconi family, listed on the Milan Stock Exchange, will increase its share capital by 22 million euros after the new shares are put into circulation.

The current issued share capital amounts to 800 million (divided into 2,707,506,599 shares, of which 1,526,279,035 are A shares and the rest are B shares), while that of Mediaset España is 156 million.

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