April 7, 2000
Merger of Audiofina - CLT-UFA and Pearson Television (GBL)
MONTREAL, April 7 - Power Corporation of Canada and Power Financial
Corporation, as well as the Frère Group, announce that their affiliate Groupe
Bruxelles Lambert (GBL), as well as Bertelsmann and Pearson, have agreed
today, to bring together their interests in Pearson TV, CLT-UFA and Audiofina
S.A.
This new alliance is in line with GBL and Electrafina's intention to
reinforce their position in the European media sector, initiated in 1997 with
the combination of CLT and UFA. Since then, GBL has participated, through its
joint venture with Bertelsmann, in the development of CLT-UFA as the largest
broadcasting group in Europe. GBL's stake in CLT-UFA, through the publicly
traded company Audiofina, represents presently nearly 50% of the estimated
value of GBL.
GBL and Electrafina are investment holding companies jointly controlled
by the Frère and Power groups. As of April 6, GBL and Electrafina had a
market capitalization of approximately $7.6 billion and $6.8 billion
respectively.
Attached to this release is the joint press release of GBL, Bertelsmann,
and Pearson issued earlier today in Europe (6 pages).
AUDIOFINA, CLT-UFA AND PEARSON TELEVISION MERGE TO CREATE
EUROPE'S LEADING INTEGRATED BROADCAST AND CONTENT GROUP
Bertelsmann AG, Groupe Bruxelles Lambert S.A. (``GBL'') and Pearson plc
(``Pearson''), have today agreed to merge CLT-UFA, Europe's leading commercial
television and radio broadcaster, with Pearson Television (``PTV''), the
world's leading international independent television production company.
The new group will be the leading pan-European integrated broadcast and
content company with annual revenues of some (euro)4 billion. It will seek a
primary listing on the London Stock Exchange as from completion of the merger.
Bertelsmann and GBL, the two co-controlling shareholders in CLT-UFA, will
reorganise their interests in CLT-UFA and Audiofina. As a result, Bertelsmann,
along with WAZ, the German publishing company, will have an economic interest
of around 37% in Audiofina, with GBL holding an economic interest of
approximately 30%. Pearson will hold an economic interest of 22% and around
11% will be publicly held. Audiofina, which is listed in Brussels and
Luxembourg, will be renamed, with the new name of the company announced at a
later date.
In 1999, the combined group generated proforma earnings before interest
and tax of (euro)459 million (including associates) on proforma revenues of
(euro)3.78 billion. At 1 January 2000, the group had a proforma net cash
position of (euro)308 million.
CLT-UFA
--------------
CLT-UFA has interests in 22 television channels, which attract more than
120 million daily viewers, and 18 radio stations, which attract more than
25 million daily listeners, across Europe. The main broadcast brands are RTL,
M6 and Channel 5. In a joint venture with PTV, CLT-UFA is a major force in
television production company in Germany. CLT-UFA also operates one of
Europe's leading sports rights businesses, marketing the broadcast rights of
some 40 national football teams and 250 soccer clubs across Europe. It has a
rapidly growing online presence, with more than 70 branded internet sites
across Europe that generate some 150 million page views per month.
PTV
-------
PTV has some 160 television programmes in production in 35 countries
around the world, producing over 10,000 hours of programming every year. It
makes sales from its library of some 17,500 hours of programming to over
100 territories. It owns a leading selection of game show formats, is the
largest producer of serial dramas and makes a wide range of entertainment
programmes. It has shareholdings in broadcasters in the UK, Hungary, Spain and
Australia and in Uproar.com, one of the world's leading online entertainment
sites.
Audiofina
--------------
Listed on the Luxembourg and Brussels stock exchanges, Audiofina
(AUFI.LX/AUFI.BB) currently controls 49.85% of CLT-UFA. In addition, it holds
a 28% interest in Groupe Jean-Claude Darmon, the Paris-listed sports rights
marketing group. At 31 December 1999, Audiofina had net cash balances of
(euro)794 million.
Reasons for the merger
------------------------------------
The combination of CLT-UFA and PTV will create an integrated pan-European
company with highly successful business operations spanning television and
radio broadcasting, television production, sports rights and online
activities. This will put the combined company in a better position to achieve
stronger revenue and earnings growth:
- PTV's content will enrich the broadcast channels, enabling them
to attract bigger audiences with more in-house productions;
- CLT-UFA's broadcast channels will provide expanded routes to market for
PTV's content;
- Access to Europe's most important broadcast network will enable the
combined company to be more innovative in developing new television
genres, shows and formats;
- Combining rich content with powerful cross-promotional platforms on tv
and radio will enable the company to build one of Europe's leading
online and new media presences;
- The combined company will have the financial, management, production
and broadcasting strengths to accelerate growth, both organically and
through acquisition, in existing European markets and break into new
markets worldwide;
- The combined company will also own a 65% stake in Channel 5, the UK's
fastest growing terrestrial channel.
Management and board structure
-------------------------------------------------
Didier Bellens, chief executive of CLT-UFA, will be chief executive of
the new group. Richard Eyre, chief executive of PTV, will be the executive
director responsible for leading the content business and directing the new
group's future development and strategy. Richard Eyre is also expected to
become chairman of Channel 5. Ewald Walgenbach, chief operating officer of
CLT-UFA, will take up the same role in the new group.
In addition to the executive directors, the company's board of directors
will include 11 non-executive directors, of which six will be appointed by
Bertelsmann and GBL and two by Pearson. Thomas Middelhoff (CEO of Bertelsmann)
Siegfried Luther (Bertelsmann's CFO), Erich Schumann (CEO of WAZ), Marjorie
Scardino (CEO of Pearson) and John Makinson (Pearson's CFO), are all expected
to join the board. GBL will nominate its board representatives at a later
stage. Three independent non-executive directors will be appointed, of whom
one will be nominated as chairman.
Marjorie Scardino, chief executive of Pearson, commented:
``This deal puts Pearson Television at the heart of one of Europe's most
extensive - and most popular - broadcasting networks. It provides the stage
on which talent can really flourish, creating compelling entertainment across
radio, television and new media. We also see the chance for other parts of
Pearson to work with this new company to cross promote our brands and content
through all media.''
Commenting on the merger, Bertelsmann CEO Thomas Middelhoff said:
``Bertelsmann, in the last few weeks, clearly strengthened its positions
in the area of content and significantly boosted the e-commerce business. We
are now catapulting our television business into a new dimension, enabling the
new group to develop new content and genres for combined television and
internet operations. Through Audiofina, one of our expansive core businesses
can utilize the tremendous potential of the stock market for further expansion
for the first time.''
Albert Frère, Chairman of GBL, said:
``My business partner, Paul Desmarais, and I are very happy with the
tremendous progress made by CLT-UFA since the merger some three years ago in
transforming Europe's largest broadcaster into a highly profitable and tightly
focused group. Today's merger marks a further step in the successful strategy
developed with our partner, Bertelsmann. The alliance between CLT-UFA and
Pearson Television offers great opportunity for growth and the creation of
shareholder value.''
Please direct enquiries to:
--------------------------------------
Oliver Herrgesell, Bertelsmann AG Corporate Communications
Tel: +49 5241 80 24 66
E-mail: oliver.herrgesell@bertelsmann.de
John Fallon, Pearson plc Corporate Communications
Tel.: +44 171 411 2310
E-mail: John.Fallon@pearson.com
Patrick De Vos, GBL
Tel.: + 32 2 547 2287
E-mail:pdevos@gbl.be
Ingrid Haas, CLT-UFA Corporate Communications
Tel: + 352 42142 5020
E-mail: Ingrid_Haas@clt-ufa.com
Roy Addison, Pearson Television Corporate Communications
Tel: + 44 171 691 6830
E-mail: roy.addison@pearsontv.com
Nicola Weiner, College Hill (for Audiofina)
Tel: + 44 171 457 2020
E-mail: nicola@collegehill.com
Notes to Editors
------------------------
THE TERMS OF THE AGREEMENT
------------------------------------------------------
Under the terms of an agreement, dated 7 April 2000, between Audiofina
S.A., (``Audiofina'') BWTV GmBH (a subsidiary of Bertelsmann A.G.) (``BWTV''),
Groupe Bruxelles Lambert S.A., (``GBL'') and one of its subsidiaries,
Electrafina, and Pearson plc, (``Pearson'') the parties have agreed the
following principal terms:
I. In exchange for the contribution of Pearson TV, Pearson will
receive 22% of the enlarged fully diluted share capital of
Audiofina;
II. BWTV and GBL will reorganise their interest in CLT-UFA and
Audiofina such that they will own, on a 50/50 basis, directly or
indirectly, 60% in Audiofina (of which at least 50.1% will be held
through a joint structure or arrangement (``BWTV/GBL Alliance''));
III. Pearson TV will be entitled to all future dividends on Audiofina
shares other than the proposed dividend of 0.75 EUR per share
proposed in respect of the year to 31 December 1999;
IV. The transaction will be conditional on inter alia; (a) the approval
of appropriate competition and regulatory authorities (including
the European Commission, under the Hart Scott Rodino Act and the
Independent Television Commission in the UK); (b) the listing of
Audiofina on the London Stock Exchange; (c) certain tax clearances
considered necessary by the parties; (d) the approval of Audiofina
shareholders; and (e) there being no material breach of certain
covenants and warranties given in the agreement;
V. To give certain mutual pre-completion undertakings, representations
and warranties and tax indemnities;
VI. Certain limited matters relating to dividend policy, capital
increase, corporate governance, major transactions and significant
debt increase will require the approval of the BWTV/GBL Alliance
and Pearson;
VII. The existing rights of the employees of Pearson TV will be fully
safeguarded;
VIII. The parties other than Audiofina will agree for the period to
31 December 2003 not to compete with Audiofina in the business of
television and radio station broadcasting (subject to certain
exceptions);
IX. Pearson will be granted warrants to subscribe for a further 2% of
Audiofina shares in the period to 3 December 2003 at prices ranging
from (euro)160 - (euro)180 to maintain its holding above 20% of
Audiofina;
X. Each of the parties will have certain pre-emption rights over the
sale of shares in Audiofina and, in the event of a sale of a direct
or indirect holding of 40% of Audiofina, that Pearson will have a
right to ``tag along'' (ie sell out to any purchasers of any such
holding on the same terms); and
XI. Pearson will lose its minority protection, board representation,
pre-emption and tag along rights if its stake in Audiofina fall
below 15% (although it may appoint one director until its holding
falls below 10%). It will also lose such rights on a change of
control.
CLT-UFA
--------------
CLT-UFA's major business operations are in free-to-air broadcasting,
content production and radio broadcasting. In 1999, it generated earnings
before interest and tax of (euro)346 million (including associates) on sales
of (euro)3.211 billion (excluding exceptional items.)
FREE-TO-AIR BROADCASTING
CLT-UFA has interests in 22 television channels, in 11 European
countries, which reach over 120 million viewers per day. In both reach and
revenue terms, it is the largest broadcaster in Europe.
In Germany, it owns RTL TV, holds a 74.8% stake in Vox and also has
stakes in RTL 2 (35.9%) and the children's channel, Super RTL (50%.) In the
UK, it owns a 35% stake in Channel 5, the UK's fastest growing terrestrial
channel. In France, it owns a 42% stake in the M6 Group. M6 is France's
second largest commercial channel and the group also operates six thematic
channels and owns 25% of the pay tv channel, TPS. Outside of the M6 Group,
CLT-UFA has a stake in RTL 9 (35%), a general entertainment cable channel, and
TMC (23.8%), Monte Carlo's family channel. In the Netherlands, it owns HMG
Group, operating RTL 4, a general entertainment channel, RTL 5, a specialist
news channel and Veronica, which is aimed at teenagers and young adults. In
Belgium, it has stakes in RTL TVI (66%), a leading French speaking channel and
Club RTL (66%), a themed channel aimed at the youth market. It also owns RTL
Tele Luxembourg, RTL 7 in Poland and has a 49% stake in RTL Klub in Hungary.
It also owns a 5% stake in Premiere, the German pay-tv sports channel.
CONTENT AND RIGHTS OWNERSHIP
CLT-UFA is a major producer of television programmes in Germany,
producing over 1,000 hours of programming per year. Its production companies
are UFA Productions, Trebitsch Produktion, Delux Productions and Grundy-UFA, a
joint venture with PTV. Its sports rights company, UFA Sports, owns the
broadcast rights for over 300 clubs and 40 national teams. It also has a TV
Rights business, which owns a library with 5,500 hours of television
programmes and 700 video titles.
RADIO
CLT-UFA is one of Europe's leading radio companies, owning stakes in
18 radio channels across Europe. In Germany, it owns stakes in 2 national
radio stations and 5 regional stations covering Berlin, Hamburg, Cologne and
Bavaria. In France, it owns RTL, a general interest radio station, RTL 2,
which is aimed at the 20 - 40 age range, and Fun Radio, which is aimed at the
20-25 age range. It also owns stakes in radio stations in the UK (80%),
Luxembourg (100%), two stations in Belgium (43% and 35%), one in the
Netherlands (39.5%), two stations in Scandinavia (49% and 100%) and one in
Austria (25.1%).
PEARSON TELEVISION
-------------------------------------
Pearson Television is one of the leading independent international
television production companies in the world. It has some 160 programmes in
production in 35 countries around the world and makes sales from its library
of over 10,000 hours of programming to over 100 territories. It owns an
important selection of game show formats, is the largest producer of serial
dramas and makes a wide range of entertainment programmes, including situation
comedies, children's animation and action adventures. Its most popular
programmes include Baywatch, The Bill, Salatut Elamat, Skilda Varldar, Gute
Zeiten, Schlechte Zeiten, Verbotene Liebe, Unter Uns, Hinter Gittern, The
Price is Right, Family Feud, Night Fever, 100%, Match Game and Neighbours.
It also owns a 29% stake in the UK's Channel 5, 20% stakes in RTL Klub in
Hungary and UKTV in Australia and a 7% stake in Uproar.com, one of the world's
leading online entertainment sites. From its studios in central London, PTV
also runs a transmission business, which transmits 50 channels for
broadcasters such as Flextech, Discovery and Universal.
MAJOR SHAREHOLDERS IN THE NEW COMPANY
------------------------------------------------------------------------------
BERTELSMANN AG: Bertelsmann ranks among the world's premiere media
enterprises. The company's 72,000 employees generate some 15 billion euros in
revenues in 53 countries. Founded in 1835 as a Christian publishing company in
the State of North Rhine Westphalia's town of Gutersloh, the firm has evolved
to become a full-fledged media and entertainment business serving the full
range of media segments, covering the book, newspaper, magazine, scientific
literature, music, radio, television, film production and printshop
submarkets. Moreover, Bertelsmann provides media services of all kinds and has
established a formidable Internet and e-commerce presence that is second to
none in its peer group. Bertelsmann's characteristic features are the
company's decentralized structure counting over 600 individual firms, most of
which are independent, its policy of internal journalistic pluralism and its
clear commitment to a multiple-brand policy for media audiences in its various
language and cultural regions of activity. The majority of the company's
capital stock is owned by the Bertelsmann Foundation. Voting rights are held
by the administrative body Bertelsmann Verwaltungsgesellschaft to which post
WWII founder, co-owner and benefactor Reinhard Mohn transferred his voting
rights.
GROUPE BRUXELLES LAMBERT S.A.: Groupe Bruxelles Lambert S.A. is an
investment holding company incorporated in 1953 which has been quoted on the
Brussels Stock Exchange since 15 October 1956. GBL is controlled by the
families Frère and Desmarais through their respective holding companies. The
Group has a market capitalisation of (euro)5.5 billion. GBL aims to grow a
rich and balanced portfolio of industrial investments, focusing on a small
number of first-class companies acting in a diversified range of sectors, in
which GBL can exercise its role as a professional shareholder. GBL's actual
portfolio includes five long-term investments : CLT-UFA, TotalFina, Suez
Lyonnaise des Eaux, Imerys and Rhodia, held directly or through two
intermediate companies : Electrafina (80.8 %) and Audiofina (72.6 %). Since
the merger of the group CLT and UFA in 1997, GBL has participated, through its
joint venture with Bertelsmann, in the development of CLT-UFA as a major
European broadcasting group. GBL's 50 % investment in CLT-UFA, through the
quoted company Audiofina, represents presently nearly 50 % of the estimated
value of GBL.
PEARSON PLC is an international media company. In 1999, it made
operating profits of (pound)549m on sales of (pound)2,395m. In addition to
Pearson Television, its major business operations are: The Financial Times
group, which has an international network of business and financial newspapers
and online services which are read by millions of business executives and
investors every day; Pearson Education, the world's leading education
business, which helps teachers teach and students learn at every stage and in
every part of the world; The Penguin Group, which is one of the pre-eminent
names in consumer publishing, with an unrivalled range of fiction and
non-fiction, bestsellers and classic titles; and Recoletos, one of the top
media companies in Spain, which is also breaking out into new Spanish and
Portuguese speaking markets.