TMG acquires right to invest in combined ProSiebenSat.1 / SBS Broadcasting Group

Telegraaf Media Groep N.V. (“TMG”) and Lavena Holding 5 GmbH (“Lavena”), an entity controlled by funds advised by Kohlberg Kravis Roberts & Co. (“KKR”) and funds advised by Permira (“Permira”), have reached agreements in which TMG is being granted an option to acquire 12% of the voting shares in ProSiebenSat.1 Media AG (“ProSiebenSat.1”), subject to the completion of the acquisition of the SBS Group by ProSiebenSat.1 early July 2007.

Given the current shareholders structure Lavena would control 76% of the voting shares in ProSiebenSat.1 while Axel Springer AG and TMG would hold 12%, in case TMG exercises the option.
TMG will finance the transaction through the sale to ProSiebenSat.1 of its 20% equity interest in SBS Broadcasting S.à r.l. (“SBS”), the holding company of the SBS Group. The proceeds from the sale amounts to € 433 million. The estimated book profit will amount to approximately € 360 million and will be accounted for after closing date. 
TMG’s right to invest in ProSiebenSat.1 is structured through an option to acquire 12% (13,127,832) of the voting shares in ProSiebenSat.1 from Lavena exercisable as per 1 June 2008 at a price of € 34.71 per share minus dividends payable in the period between 6 March 2007 and the exercise date of the option. In case TMG does not exercise its call option, Lavena has a put option on TMG to be exercised before 15 August 2008 at a fixed price of € 28.71 per share minus any distribution beyond the average dividends received before that date. If TMG exercises its option right, the proceeds of the sale of SBS together with the expected interests will cover the funding of the investment.
ProSiebenSat.1 operates the leading German commercial TV channels Sat.1 and ProSieben. In addition, the ProSiebenSat.1 Group is active in pay TV, video on demand, mobile TV, internet and production. The ProSiebenSat.1 non-voting preference shares are listed on the Frankfurt stock exchange. Upon completion of the acquisition of the SBS Group by ProSiebenSat.1, ProSiebenSat.1 would hold 100% of the SBS Group.
TMG will continue to work closely with the Benelux operations of the new combination in the field of production and digital publishing. In light of the industry expertise of TMG, also as a result of TMG’s previous and present involvement with the SBS Group, Lavena will endeavour to complement the knowledge and experience of the existing supervisory board of ProSiebenSat.1 with the expertise of TMG through the support for the appointment of two senior executives of TMG to ProSiebenSat.1’s supervisory board.
Ad Swartjes, CEO of TMG, commented: “By it’s nature, broadcasting has become more and more an international play. The acquisition of the SBS Group by ProSiebenSat.1 fits into that picture. The transaction itself gives TMG the possibility to participate in the strong international growth and synergy potential of the new combination ProSiebenSat.1-SBS. This step should be seen in the context of the ongoing internationalisation and multi-media strategy of our company. Together with our partners in ProSiebenSat.1, we will explore possibilities to cooperate both in the Netherlands and internationally and realise the full value potential of this strategic relationship.”