The price of Liberty

16 September 2010 By Fiona Maharg-Bravo

The indebted Spanish media group is to sell a 58 pct stake to U.S. investor Liberty for 680 mln euros. The deal is cheap for Liberty. For Prisa investors, the dilution is harsh. But Prisa’s problems are advanced, and a small stake in a rescued business is better than wipe out.

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U.S. acquisition vehicle Liberty Acquisition Group has launched a roadshow aimed at convincing investors in the cash shell to back its deal with Prisa, the Spanish media group.

Under the deal, which would complete in October after regulatory and Liberty shareholder approvals, the U.S. group will inject 676 million euros in cash. Each Liberty shareholder will receive 1.5 Prisa shares plus three nonvoting mandatory convertible shares, and $0.50 in cash. These terms were revised in Liberty's favour from an earlier deal in March.

Prisa shareholders will receive a 1.1 Prisa warrants per share, which carry an option to buy Prisa shares at 2 euros each over 3.5 years. On a fully diluted basis, current shareholders would own 42 percent of the company. Prisa's core shareholders, the Polanco family, will retain a minimum 30 percent of the company after a revision of the terms of its March deal with Liberty.

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