Grupo Prisa (Promotora de Informaciones SA), Spain’s largest media conglomerate, has gotten a big cash infusion to fund its expansion in the US and Latin America. The deal will also put Prisa on the New York Stock Exchange (NYSE).
In a deal which received final approval on Monday (11/29) by current shareholders of Prisa at a special meeting in Madrid, the company will merge with Liberty Acquisitions Holding Corporation, a “blank check” company which trades on the NYSE as “LIA.” It raised $1 billion in a 2007 IPO and has been looking for a place to invest the money. That place, Liberty shareholders agreed in a vote last week (11/24), is Prisa. The complicated deal will have Liberty shareholders receive a combination of stock in the new Prisa and cash. They can also elect to take $10 in cash per Liberty share (the IPO price) if they don’t want to become Prisa investors. But only a small number elected to take the cash, so it looks like current Liberty shareholders will own an equity stake in the new Prisa near the high end of the range of between 51.6% and 57.7% cited in the prospectus.
Under terms of the deal, each outstanding share of Liberty common stock will be exchanged for either, at the option of the stockholder, $10.00 in cash or the following mixed consideration: (i) 1.5 newly created Prisa Class A ordinary shares, (ii) 3.0 newly created Prisa Class B convertible non-voting shares and (iii) $0.50 in cash, as well as cash in lieu of any fractional shares.
When the deal closes in just days the new Prisa will receive 650 million euros in cash ($861 million) from the Liberty coffers. That will make a significant dent in the company’s $6.4 billion in debt. Also, Prisa has been doing a number of other deals to deleverage. According to the company’s announcement of the Liberty approval, “Last April, PRISA announced an agreement for the acquisition of 25% of Santillana by the DLJ South American Partners fund. In November of this year, regulatory authorities approved the contracts signed with Telecinco and Telefónica whereby PRISA will receive 970 million euros for the sale of 22% of Digital+ to each one of these companies and PRISA will retain 56% of the digital platform. In December, Cuatro and Telecinco will join forces in a new audiovisual company in which PRISA will hold an 18.3% stake. All of these operations are part of a financial reorganization process arranged by PRISA and financial institutions.”
Liberty’s founding sponsors, Berggruen Acquisition Holdings Ltd. and Marlin Equities II LLC, along with some other parties recently purchased $500 million of new preferred stock to help finance the transaction with Prisa.
Current shareholders of Prisa, which is listed on the Madrid Stock Exchange, are also being invited to subscribe to subscribe to 1.1 new shares for each share they currently own. Prisa shares will continue to trade in euros on the Madrid Stock Exchange and other European exchanges, while the converted Liberty shares will trade as American Depositary Shares (ADS) in dollars on the NYSE.
The board of directors of Prisa is being expanded to 15 with the addition of seven new members. Juan Luis Cebrián will continue as Chairman of the Executive Committee of the Board and CEO of the company.
Prisa operates in more than 20 countries, including Brazil, Mexico and Argentina as well as many other Latin American countries and the United States, with almost 15,000 employees worldwide. Its holdings include Spain’s largest newspaper, El Pais; pay TV in Spain; radio in Spain and several other countries, including the US; a major TV network in Portugal; and numerous other media outlets in Spanish- and Portuguese-speaking parts of the world. Along with the Liberty deal, Prisa’s radio operations, previously branded as Unión Radio, have been renamed Prisa Radio.
RBR-TVBR observation: As noted when the deal with Liberty was first announced, the United States is a major target for growth by Prisa. While it is limited by rules on foreign ownership, it has already planted a flag in radio with deals to program W Radio 690 in SoCal and WSUA-AM Miami. Prisa also distributes radio network programming in the US also set up via GLR (Grupo Latino Radio).