Bertelsmann Abandons RTL Takeover Bid

20 March 2002

German media giant Bertelsmann has abandoned plans to buy the 10% it does not already own of RTL, Europe’s largest commercial broadcast group.

Privately held Bertelsmann was keen to buy out other shareholders before its initial public offering, expected in the next three years. However, it has dropped the proposed purchase after opposition from other investors in Luxembourg-headquartered RTL.

One of the major stumbling blocks is price. Bertelsmann offered €44 (£27; $39) per share for the 9.8% of RTL held by other investors – the same price it paid to cash-strapped British media group Pearson for its 22% stake in the broadcaster late last year [WAMN: 27-Dec-01].

However, this price is considered derisory by some shareholders who point to Bertelsmann’s acquisition last July of a 30% stake in RTL from Groupe Bruxelles Lambert, which received a 25% holding in the German group in return, valuing RTL shares at around €200 each.

Bertelsmann refused to raise its offer [WAMN: 11-Jan-02], in part because this would leave it contractually obliged to pay more to Pearson. It also ran into political opposition from ministers in Luxembourg, and faced a possible lawsuit from some RTL shareholders, who argued that reducing the amount of free-floating stock to zero would break a commitment made when the shares were issued.

The decision to drop the scheme took RTL – owner of 23 TV channels and fourteen radio stations across Europe – by surprise: “We expected the plan to be abandoned, but not that quickly,” it declared. However, Bertelsmann did not rule out increasing its stake by buying shares on the open market.

Data sourced from: Handelsblatt (Germany); The Wall Street Journal Online; additional content by WARC staff