Pro7 refinances to fund expansion

German commercial TV group Pro7 has raised €515 million in additional capital to finance the “company’s growth strategy by the acquisition of other companies and interests in other companies in particular in the digital space.” The capital increase will furthermore serve general corporate purposes as well as support the strengthening of the company’s balance sheet, according to the release. The earnings oriented dividend policy of the company remains unaffected, it states.

The extra capital was offered at €36.25 per share and around 14 million new shares issued at a reported 4 per cent discount.

Equity analysts at Exane/BNP-Paribas said that while the amount raised is relatively modest in relation to the size of the business, “the timing and rational of the deal could cause slightly negative reaction in our view: indeed shares have de-rated in the past 6 months on advertising weakness and the fact that there is been a growing debate in the street on whether Pro7 can sustain its generous dividend policy and ambitious Digital Merger & Acquisition strategy. In addition Pro7 has recently reaffirmed its 2018 M&A target which includes the benefit from acquisition and it is not clear at this stage if Pro7 will require future substantial M&A (funded by the right issue) to achieve its target or whether new funds will allow the group to deliver beyond their targets.”

“On the bright side,” said the investment bank, “we like Pro7 financial discipline and believe Pro7 has been very effective at managing both a sustainable/profitable TV business and invest dynamically in profitable and growing digital business – transforming its mix like no other broadcasters has done so far.”

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