Advanced Television

Bank analyses Mediawan

June 24, 2020

By Chris Forrester

On June 22nd, Mediawan announced it was acquiring Lagardere Studios. The news prompted a spectacular 41 per cent rise in Mediawan’s shares.

Investment bank Berenberg has looked closely at Mediawan and reports on its founders (Pierre-Antoine Capton, Xavier Niel and Matthieu Pigasse) who used the occasion to announce the creation of the Mediawan Alliance, which is controlled by the trio and supported by other financing partners, including MACSF and KKR.

The bank says: “Mediawan Alliance will launch a tender offer on all Mediawan securities not held by the founders and MACSF, which is c73 per cent of the group’s share capital. The offer price is €12 per share – c40 per cent higher than its 19 June close price – which implies, on our estimates, FY20/21 EV/EBIT of c18x/11x, respectively, for c30 percent FY20-23 EBIT CAGR.”

“The tender offer will be filed in early July and is subject to Mediawan Alliance obtaining a number of Mediawan shares representing at least 55 per cent of the group’s share capital and voting rights, on an outstanding and fully diluted basis, including the Mediawan securities held by the Mediawan founders and MACSF,” says the bank.

The bank thinks KKR’s German company, Leonine, can be a strategic partner for Mediawan: “The June 22 announcement also mentioned that the Mediawan Alliance would hold a minority (25 percent) stake in Leonine, a leading German independent company in content production, distribution and licensing, which would be contributed by KKR”.

“Leonine was created through takeover of the Tele München Gruppe and a number of film production companies in Germany by KKR, and has been producing high-profile and successful shows, such as Dark for Netflix. Mediawan has always been vocal about extending its geographic presence to Germany. We therefore see Mediawan Alliance’s stake in Leonine as a way for Mediawan to have a strong strategic partner in Germany leading to future co-operations and co-productions, which in turn lead to higher budgets, stronger potential for international appeal and improved margins,” suggests the bank.

The bank’s report says that overall investor feedback it collected so far is that the tender offer price is low. “We view the tender offer as an opportunistic move by the founders given the stock’s muted performance since the company’s IPO, down from €10 to €8.43 as of 19 June. While the price offered is c40 per cent higher than the 19 June closing price, we note that feedback from some medium/longer-term horizon investors is that this is low and does not reflect the potential upside in the story. However, given the stock’s performance, we believe that some investors may take the opportunity and tender their shares, crystallising capital returns in the short term. Even if the tender offer were to fail to go through, we think the €12 offer price will provide downside support to future price movements.”

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