Bertelsmann will exchange a quarter of its shares for control of RTL Group, Europe’s largest broadcaster, paving the way for an initial public offering of the world’s fourth-largest media company.
Bertelsmann will buy 30% of RTL from Groupe Bruxelles Lambert, bringing its stake to 67% in the company, which owns television shows such as “Baywatch.” The RTL stake was worth $3.95 billion at Friday’s close.
Groupe Bruxelles has the right to sell its 25.1% stake in Bertelsmann in an IPO after three to four years. The 166-year-old Bertelsmann, which owns Random House Inc., said it needs to be able to fund acquisitions with stock to keep up with rivals such as AOL Time Warner Inc. and Vivendi Universal.
This “gives a clearer focus to Bertelsmann,” said Richard Jones, an analyst at UBS Warburg who estimates the company is worth $17.4 billion.
Luxembourg-based RTL, whose channels include Germany’s RTL and France’s M6, was formed last year by combining CLT-UFA, a broadcasting venture of Bertelsmann and Groupe Bruxelles, with media company Pearson’s television unit. London-based Pearson, which approved Monday’s agreement, owns about 22% of RTL, and the rest is publicly traded.
Shares of RTL rose as much as 7.5% to $93.69, valuing the company at $14.2 billion. Shares of Bruxelles, the investment vehicle of Albert Frere, rose 11% to $256.71.