British broadcaster ITV has decided to sell its 45 per cent stake in Irish commercial television group TV3, writes Siobhán Creaton, Finance Correspondent
ITV will sell its stake to the European private equity firm Doughty Hanson for £70 million (€103 million) as part of a deal worth €265 million. ITV originally paid £18 million for the stake in 2001. At the time, it also took on £11 million of debt.
Investors who own a further 10 per cent of the station include U2 manager Paul McGuinness, the band's accountant, Ossie Kilkenny, and businessman James Morris, who founded the station in September 1998, 10 years after they were awarded the right to launch a third channel in Ireland. They have also agreed to sell their stake to Doughty Hanson, realising €59 million. Last May, Doughty Hanson agreed to buy the 45 per cent stake of TV3 held by Canadian-based international broadcaster CanWest Global Communications.
ITV, which also held its 45 per cent shareholding through the CanWest Granada Media Holdings Limited company, could have blocked the takeover by the triggering pre-emption rights it held that would have allowed it to match Doughty Hanson's offer for the CanWest stake.
It had 90 days to decide. The agreement between the private equity group and the Canadian company was finalised after it waived that right yesterday.
The transaction is subject to regulatory approval and is expected to be completed by August 31st.
TV3 is the second most-viewed channel in the Republic after RTÉ One and has posted strong sales and profit growth over the last three years.
Yesterday, CanWest said it had agreed to also sell its Irish sales arm, CanWest Ireland Sales Limited. It will receive a total of €133.4 million for the sales company plus its TV3 stake, which is held through CanWest Granada Media Holdings Limited.
In a statement, CanWest said it would use the proceeds of the transaction to reduce debt and further strengthen its financial position.
As well as being a major stakeholder in TV3, ITV also supplies about 60 per cent of the station's programming, including top-rated shows like Coronation Street and Emmerdale.
This agreement is scheduled for renegotiation in December 2007. Doughty Hanson has said it was confident that ITV would maintain a business relationship with TV3 in the future.
ITV will also continue to manage airtime sales for TV3.
Doughty Hanson would not comment on the deal ahead of its completion. When it reached agreement to purchase CanWest's stake in May, the firm said that TV3's acquisition was in line with the firm's strategy to acquire market-leading, mid to large-sized European businesses.
Its principal, Steven Bone, said: "TV3 is a high-quality broadcast business with an excellent market position and strong growth potential."
Doughty Hanson has said it will work with TV3's management to grow the business by continuing to strengthen its programming mix.
ITV has collected nearly £500 million from non-core sales since completing the merger of Carlton Communications and Granada in 2004. - (Additional reporting, Financial Times service)
