Private equity firms Permira and Kohlberg Kravis Roberts & Co agreed to buy SBS Broadcasting for about 1.7 billion euros ($2.1 billion) cash to access some of Europe's fastest growing television markets.
The firms said on Monday they plan to take the company private and take on 170 million euros of debt in SBS, which has TV and radio stations in Denmark, Sweden, Hungary and other countries that reach a total of about 100 million people.
Luxembourg-based SBS said the deal had been unanimously approved by a special committee of its independent directors, management board and 22 percent of the outstanding common shares, including largest shareholder Liberty Global, which is part of John Malone's cable empire.
The remaining shareholders are set to vote on the deal during an extraordinary general meeting some time in October, although an exact date has not yet been set.
If it gets approved, shareholders will receive about 46 euros, or $56, per fully diluted share, a 16 percent premium to their price on August 12 before a report first surfaced about a possible sale of the company.
Still, SBS shares were trading up 7.3 percent to 46.45 euros by 1425 GMT in Amsterdam, indicating that investors were anticipating a rival bid or a higher price. In New York, the shares were up 7.9 percent to $56.62.
Fortis analyst Mariska Zonneveld said that because of SBS's higher margin expectations, its underleveraged balance sheet and potential cost savings, rival broadcasters could value SBS as high as 55 euros a share, even after taking into consideration the 50 million euro break-up fee in the deal with Permira and KKR.
"The large US parties are able to buy SBS as a whole and hence acquire a strong footprint in Europe in one sweep," she said. European broadcasters, she added, would be interested in individual stations in their own markets.
The deal comes amid a flurry of activity in the European media sector as private equity firms, having raised billions in funding, compete aggressively against broadcasting and publishing companies.
The buyout firms said they were attracted to SBS because of its growth potential.
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