Bertelsmann abandons efforts to take RTL private

By Bertrand Benoit in Frankfurt

Financial Times, March 19 2002

Bertelsmann, the German media group, on Tuesday said it had abandoned plans to buy the shares it does not own in RTL, Europe's largest television broadcaster, after its planned offer ran into regulatory obstacles.
The group had hoped to consolidate its holding in publicly-listed RTL by buying out all remaining shareholders ahead of its own initial public offering in 2004 or 2005.
But plans to launch a E44-per-share offer for RTL's free float raised regulatory issues and opposition from Luxembourg-based shareholders who are suing Bertelsmann in relation to a previous deal.
The principle of the offer was agreed on the request of Pearson, owner of the Financial Times, after it sold its 22 per cent stake in RTL to Bertelsmann last December, taking the German group's stake to 89 per cent.
Bertelsmann insiders said the capital market regulator in one of the three countries where RTL is listed had insisted the offer should include a step-up clause in case the Luxembourg shareholders won their lawsuit.
The shareholders, led by BGL Investment Partners, Audiolux and Investas, argue Bertelsmann once put an implied value on their shares of up to E200 when it bought the 30 per cent stake owned by Albert Frère's Groupe Bruxelles Lambert last year.
"Those who would have accepted [the E44 offer] would have waived rights under any existing or future litigation to further payments," one person close to Bertelsmann said. "Bertelsmann was told it could not launch our offer on those terms, and therefore reluctantly decided not to proceed."
Bertelsmann said it had bought 785,000 RTL shares at E44 each since December 24, taking its stake in the broadcaster from 89 to 90.2 per cent, and was reserving the right to further increase its stake.
One person close to RTL said: "It is a shame there was no offer because it is always nice for shareholders to have a choice. But RTL will just have to keep running the business in the interest of all shareholders."
Analysts, however, said they had expected the move after Bertelsmann passed a self-imposed deadline for filing the offer at the beginning of February. They said the group could now spend the E680m on other acquisitions.
"Bertelsmann did not want to overpay, which is quite healthy," one Frankfurt-based analyst said. "And with less than 10 per cent, the public shareholders do not even have a blocking minority."
RTL will now have to bear the cost of maintaining its listings in Luxembourg, London, and Brussels - which analysts say could represent several million euros per year - but people close to Bertelsmann said it could probably do without the London listing.
"Neither us nor RTL has yet made a decision on the London listing, which is the least liquid of the three," a Bertelsmann spokesman said