China's CEFC group and eastern Europe's Penta Investments have made a joint bid for Time Warner's Central European Media Enterprises (CME), while Petr Kellner's PPF has dropped out of contention, Reuters reported yesterday based on its own sources.

Two sources familiar with the matter said CEFC and Czech-Slovak financial group Penta have submitted a joint bid for the Central European broadcaster, which could be worth around $2 billion (£1.49 billion) but pricing has not yet been finalized. A third source said the sides were nearing a deal although details were not finalized.

PPF, a financial group owned by Kellner, the Czech Republic's richest person, is no longer in the bidding for CME, according to two of the sources, making CEFC/Penta the last remaining bidder.

Penta and PPF declined to comment while a spokesman for CEFC in China did not respond to a request for comment. CEFC's Prague spokesman declined to comment when asked about a bid.

A spokesman for Time Warner declined to comment.

CME holds a heavy debt load of around $1 billion. Its market capitalization was $637.8 million at Monday's market close.

Time Warner has a 42.4 percent stake in CME but on a fully diluted basis the U.S. group has a 75 percent interest, based on warrants exercisable until May 2018 and preferred shares it holds. When factoring in that dilution, CME's market capitalization stands at $1.65 billion.
A potential sale has come into prospect since AT&T (T.N) agreed to buy Time Warner for $85 billion in October last year.

CME reported a 30 percent rise in its core operating income before depreciation and amortization (OIBDA) in the third quarter, and expects full-year core profit to increase by up to 17 percent to $165 million.

It, too, has been hit by regulatory hurdles. Croatian regulators blocked the sale of CME's Croatian business, which is among assets it wanted to sell this year to help pay down debt.
CEFC, a rapidly growing oil and finance conglomerate with assets across the world, may also face a challenge to get a deal done following Beijing’s recent clampdown on capital outflows in sectors such as media.

The Chinese group previously bought a Prague office building from Penta and has a range of other Czech investments. It briefly held a stake in another Czech publisher and TV broadcaster, Empresa Media.