European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>MFEA lower-voting ordinary shares are trading at a 33.6% discount relative to the MFEB high-ordinary shares, which seems excessive (and above the 32% average since listing of A-shares).</li>
<li>If the offer for TL5 SM succeeds, MFEA would represent 0.68x the number of MFEB and 6.81x the number of votes of MFEB, thus increased percentage of votes and liquidity.</li>
<li>Estimated settlement of the takeover is 1 September. I target a 25% discount and recommend long 1 MFEA IM/short 1 MFEB IM.</li>
</ul>


MFEA lower-voting ordinary shares are trading at a 33.6% discount relative to the MFEB high-ordinary shares, which seems excessive (and above the 32% average since listing of A-shares).
If the offer for TL5 SM succeeds, MFEA would represent 0.68x the number of MFEB and 6.81x the number of votes of MFEB, thus increased percentage of votes and liquidity.
Estimated settlement of the takeover is 1 September. I target a 25% discount and recommend long 1 MFEA IM/short 1 MFEB IM.


Media for Europe: Catalyst for Tightening of the Discount of A Shares

Danieli & C. Officine Meccaniche / Event-Driven

<ul>
<li>Spreads have generally tightened across our liquid universe, in line with the recent market gains.</li>
<li>Recommendations Long ords / short prefs: Fuchs Petrolub, Svenska Handelsbanken, Ericsson.</li>
<li>Recommendations Long prefs / short ords: Danieli, Sixt, Atlas Copco, Grifols, Telecom Italia, Volvo AB, Volkswagen, Schroders.</li>
</ul>


Spreads have generally tightened across our liquid universe, in line with the recent market gains.
Recommendations Long ords / short prefs: Fuchs Petrolub, Svenska Handelsbanken, Ericsson.
Recommendations Long prefs / short ords: Danieli, Sixt, Atlas Copco, Grifols, Telecom Italia, Volvo AB, Volkswagen, Schroders.


Liquid Universe of European Ordinary and Preferred Shares: April ‘22 Report

Mediaset España Comunicación, S.A. / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/mediaset-spa" target="_blank" data-smartkarma-citation="entities:21207:1" rel="noopener">Mediaset SpA (MS IM)</a> intends to launch a takeover bid for <a href="https://www.smartkarma.com/entities/mediaset-espana-comunicacion-s" target="_blank" data-smartkarma-citation="entities:21300:1" rel="noopener">Mediaset Espana Comunicacion S (TL5 SM)</a>. Consideration is €1.86 + 4.5 MFEA IM (€5.613 based on €0.834/ordinary share A).</li>
<li>12% premium. Conditional on reaching 90% of voting rights (excluding those already controlled by MFE, implies 39.88%). Cash component to be fully funded by target's net cash position.</li>
<li>The offer price seems reasonable. Gross spread is 7.3%, an interesting level considering that the offer will likely be successful and Mediaset España delisted in less than 6 months.</li>
</ul>



Mediaset SpA (MS IM) intends to launch a takeover bid for Mediaset Espana Comunicacion S (TL5 SM). Consideration is €1.86 + 4.5 MFEA IM (€5.613 based on €0.834/ordinary share A).
12% premium. Conditional on reaching 90% of voting rights (excluding those already controlled by MFE, implies 39.88%). Cash component to be fully funded by target's net cash position.
The offer price seems reasonable. Gross spread is 7.3%, an interesting level considering that the offer will likely be successful and Mediaset España delisted in less than 6 months.


The recent reforms incorporate "loyalty shares" as an option, which in practice come to transform the 'one share one vote' rule that prevailed in listed companies to protect equal voting rights of shareholders. The instrument equates the Spanish rules with those of other European Union countries, such as Germany, Italy, France or the Netherlands, among others, and aims to reward long-term investors, also protecting companies against short-term investors (opportunistic funds).
The Government toughens the takeover law before the arrival of 'loyal investors' on fear that hard core shareholders will take control of Spanish companies with the new double voting system.
According to the change in the regulation, an investor who exceeds 30% of the vote of a company listed due to the double voting rights of the loyalty shares, will have three months to decide whether to launch a takeover bid, reduce participation or waive its new political rights.
The Ministry of Finance discreetly introduces the change in the new Securities Market Law.
In Spain, the companies that establish the double voting system will be less prone to receiving a takeover offer. If it is already difficult to carry out an offer now without the support of the hard core nucleus on shareholders (for instance, MásMóvil has had to agree with those of <a href="https://www.smartkarma.com/entities/euskaltel-sa" target="_blank" data-smartkarma-citation="entities:21263:1" rel="noopener">Euskaltel SA (EKT SM)</a> ), it will be next to impossible under the new framework.

The recent reforms incorporate "loyalty shares" as an option, which in practice come to transform the 'one share one vote' rule that prevailed in listed companies to protect equal voting rights of shareholders. The instrument equates the Spanish rules with those of other European Union countries, such as Germany, Italy, France or the Netherlands, among others, and aims to reward long-term investors, also protecting companies against short-term investors (opportunistic funds).
The Government toughens the takeover law before the arrival of 'loyal investors' on fear that hard core shareholders will take control of Spanish companies with the new double voting system.
According to the change in the regulation, an investor who exceeds 30% of the vote of a company listed due to the double voting rights of the loyalty shares, will have three months to decide whether to launch a takeover bid, reduce participation or waive its new political rights.
The Ministry of Finance discreetly introduces the change in the new Securities Market Law.
In Spain, the companies that establish the double voting system will be less prone to receiving a takeover offer. If it is already difficult to carry out an offer now without the support of the hard core nucleus on shareholders (for instance, MásMóvil has had to agree with those of Euskaltel SA (EKT SM) ), it will be next to impossible under the new framework.

Loyalty Shares in Spain: Double-Voting Rights Could Hinder Takeovers

IPO and L/S equity, 2015 Starmine top stock picker, Global Equity Research Ltd

Rickin Thakrar

IPO and L/S equity, 2015 Starmine top stock picker

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<a href="https://www.smartkarma.com/entities/prosiebensat-1-media-se" target="_blank" data-smartkarma-citation="entities:21696:1" rel="noopener">Prosiebensat.1 (PSM GR)</a> , one of Germany’s largest free-to-air television stations has been subject to significant stake increase in recent weeks and now 24.2% owned by Silvio Berlusconi’s <a href="https://www.smartkarma.com/entities/mediaset-spa" target="_blank" data-smartkarma-citation="entities:21207:1" rel="noopener">Mediaset SpA (MS IM)</a> . On top of this, private equity firm KKR has built a 5.2% stake while Czech Media Invest, run by billionaire Daniel Kretinsky, has now accumulated a 10% stake in the company.  Mr Kretinsky is well known in M&amp;A circles after unsuccessfully attempting to take over Germany grocery and electronics retailer <a href="https://www.smartkarma.com/entities/metro-ag" target="_blank" data-smartkarma-citation="entities:21673:1" rel="noopener">METRO AG (MEO GR)</a> last year.We believe consolidation is necessary for European cable and Prosieben looks cheap vs. its peer group after a recent sell-off. On the flip side, we think KKR’s stake could represent a potential blocking stake and could scuttle a complete takeover.Below we look at the current situation and give our initial thoughts on this unique development in the Euro cable space. More details below.

Prosiebensat.1 (PSM GR) , one of Germany’s largest free-to-air television stations has been subject to significant stake increase in recent weeks and now 24.2% owned by Silvio Berlusconi’s Mediaset SpA (MS IM) . On top of this, private equity firm KKR has built a 5.2% stake while Czech Media Invest, run by billionaire Daniel Kretinsky, has now accumulated a 10% stake in the company.  Mr Kretinsky is well known in M&amp;A circles after unsuccessfully attempting to take over Germany grocery and electronics retailer METRO AG (MEO GR) last year.We believe consolidation is necessary for European cable and Prosieben looks cheap vs. its peer group after a recent sell-off. On the flip side, we think KKR’s stake could represent a potential blocking stake and could scuttle a complete takeover.Below we look at the current situation and give our initial thoughts on this unique development in the Euro cable space. More details below.

Prosieben: Berlusconi Vs. KKR –a Failed Bidding War?

Italy

MFE-MediaForEurope N.V. is a holding company. The Company, through its subsidiaries, operates television broadcasting, television production, signal broadcasting management, and music production businesses, as well as television stations. MFE-MediaForEurope serves customers in Europe.

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MFE-Media for Europe NV (MFEB IM)

Media for Europe: Catalyst for Tightening of the Discount of A Shares

In the event that the offer for TL5 is accepted by all shareholders, the number of low-voting MFEA would increase relative to high-voting MFEB, and...

Jesus Rodriguez Aguilar

Liquid Universe of European Ordinary and Preferred Shares: April ‘22 Report

Spreads have generally tightened across our liquid universe in line with the recent market gains. Danieli, Media for Europe, Schroders and Sixt...

Jesus Rodriguez Aguilar

MFE/Mediaset España: Second Time Around

MFE will launch a voluntary takeover bid for the 44.3% of the capital of Mediaset España that it does not control. This time, without the...

Jesus Rodriguez Aguilar

Loyalty Shares in Spain: Double-Voting Rights Could Hinder Takeovers

In Spain, the companies that establish the double voting system will be less prone to takeover, such as Repsol SA (REP SM) and Telefonica SA (TEF...

Jesus Rodriguez Aguilar

Prosieben: Berlusconi Vs. KKR –a Failed Bidding War?

Prosiebensat.1 (PSM GR) , one of Germany’s largest free-to-air television stations has been subject to significant stake increase in recent weeks...

Rickin Thakrar

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