PPF Group N.V. announces that its fully owned subsidiaries have signed an agreement with Central European Media Enterprises Ltd. (“CME”) to acquire CME. CME operates television stations in Bulgaria, the Czech Republic, Romania, Slovakia, and Slovenia. This transaction is subject to customary closing conditions, including the approval of the CME shareholders, the European Commission, and national regulators in certain countries where CME is active.

In connection with the transaction, among other things:

CME will convene an extraordinary meeting of shareholders for approval of the proposed merger;
The European Commission and certain national regulators will be asked to approve of the transaction;
The parties expect that the entire approval process will take several months.

Petr Kellner, the majority shareholder of PPF, commented on the transaction:
“The acquisition of CME with its media assets in five European countries will complement and further strengthen our telecommunications operations in Central and Eastern Europe. We want to leverage the natural synergies between the creation of content and its distribution with the objective of further developing our telecommunications and media businesses. CME is a healthy and well-run organization and we do not intend to make any significant changes to its operations.”

CME is active in five European countries and is one of the leading media and entertainment companies in Central and Eastern Europe. It broadcasts over 30 TV channels, both over-the-air and paid formats, to over 45 million viewers. In recent years there has been a trend towards the integration of content creation and distribution, both in Europe and the United States.

BNP Paribas and Société Générale acted as Structuring Advisors to PPF on the acquisition facilities. The EUR 1.150 billion facilities have been fully underwritten by BNP Paribas, Crédit Agricole CIB, Credit Suisse, HSBC, Société Générale and UniCredit.

J.P. Morgan Securities plc is serving as sole financial advisor and White & Case LLP is serving as legal advisor to PPF.

The majority shareholder at CME also issued a press release regarding the deal:

AT&T Inc. has announced that it has agreed to the terms of a transaction in which Central European Media Enterprises Ltd. (CME) will be acquired by an affiliate of the Czech investment firm PPF Group N.V. (PPF). CME, which has broadcast operations in Bulgaria, the Czech Republic, Romania, Slovakia and Slovenia, announced in early 2019 that it was conducting a review of strategic options, including a potential sale of part or all of the company.

Under terms of the agreement, AT&T will receive approximately $1.1 billion in cash at close and will also be relieved of a $575 million debt guarantee. The sale is consistent with AT&T’s plans to monetize non-strategic assets as it continues to pay down debt. Given the company’s confidence in reaching a net debt-to-adjusted EBITDA ratio in the 2.5x range by the end of this year, shareholders should expect that share buybacks will be in the mix in the fourth quarter of 2019, along with continued de-levering.

AT&T acquired its stake in CME with the acquisition of Time Warner, now WarnerMedia, in 2018. PPF’s acquisition of CME is expected to be completed during the second quarter of 2020, subject to the receipt of regulatory approvals and the satisfaction of customary closing conditions.

From CME stated that the cash transaction is valued at $2.1 billion.

Under the terms of the agreement, holders of all of CME’s issued and outstanding Class A common shares will receive US$ 4.58 per share. This valuation represents a premium of approximately 32% to CME’s share price prior to the announcement on March 25, 2019 that the Company was commencing a process to explore and evaluate potential strategic alternatives.

John Billock, Chairman of the CME Board of Directors, said, “The Special Committee of the Board, together with our advisors, conducted an extensive review of alternatives, which involved outreach to and engagement with a significant number of strategic and financial parties. This announcement today reaffirms our commitment to deliver value to all shareholders.”

In a joint statement, Michael Del Nin and Christoph Mainusch, Co-Chief Executive Officers, said, “Over the course of the last six years, while transforming the business and delivering a continuous stretch of astonishing profitability growth, our primary focus has been on creating value for our owners. This transaction, which is the culmination of those efforts, is the right one for our shareholders and a satisfying conclusion to one of the most successful turnarounds of a leading media company in recent times. We are pleased that the PPF Group, with a strong track record as operators of businesses across many industries, shares our perspective on the importance of local content and its ability to attract large audiences to television.”

The agreement has been approved unanimously by CME’s Board of Directors, upon the recommendation of the Special Committee of the Board. CME’s largest shareholder, AT&T Inc., has agreed to vote in favor of the transaction. The acquisition is expected to be completed around the middle of 2020, subject to the receipt of regulatory approvals and the satisfaction of customary closing conditions. The consummation of the transaction is not subject to any financing contingencies.