Family values

7 July 2015 By Olaf Storbeck

Publisher Axel Springer is in early merger talks with larger broadcaster ProSiebenSat.1. Antitrust hurdles are lower than when they last tried to combine, while synergies could be hefty. But a deal will be a challenge as long as the Springer family insists on keeping control.

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German broadcaster ProSiebenSat.1 and German publishing house Axel Springer have restarted talks about a merger, seeking to consolidate their push into digital media, two sources familiar with the matter told Reuters on July 6.

The two groups’ combined market capitalisation is about 14.43 billion euros ($15.95 billion), with ProSieben the larger at around 9.8 billion. “There is the intention, but talks are at a very early stage,” one of the sources said. News of the merger talks was first reported by the Wall Street Journal, which cited sources saying the two companies were considering a deal with ProSieben as the senior partner.

In early trading on July 7, Axel Springer shares gained 8.5 percent to 51.31 euros but lost half of the gains later. ProSiebenSat.1 shares were up 0.9 percent at 44.75 euros at 1348 BST.

Axel Springer, which publishes Europe’s best-selling tabloid “Bild”, tried to buy ProSieben a decade ago. But the deal was blocked by competition authorities and German media watchdog KEK, which feared the combined company would have too much influence over public opinion. Springer last year won a legal battle against KEK when Germany’s federal administrative court ruled that the merger would have been unproblematic from a media point of view.

Axel Springer on July 7 said its majority owner Friede Springer, widow of the company’s founder, would not give up control of the German publisher but did not deny outright that it was in merger talks. Axel Springer is currently changing its legal structure into a limited partnership, which would allow the Springer family to retain control of the group even if its stake, currently around 57 percent, falls below 50 percent.

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In early trading on July 7, Axel Springer shares gained 8.5 percent to 51.31 euros but lost half of the gains later. ProSiebenSat.1 shares were up 0.9 percent at 44.75 euros at 1348 BST.

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