Warburg To Finalise Price For C5 Stake Sale

Investment bank Warburg Pincus is likely to be about to put a price tag on the 18% stake in Channel 5 which was put up for sale at the beginning of the month (see Warburg Pincus To Sell Stake In Channel 5). Channel 5’s existing shareholders – Pearson (24%), United News & Media (29%) and CLT-ufa (29%) – have the option of buying the stake on a preemptive basis. This means that once Warburg has put a value on its holding it must first present this to the other shareholders, which then have the option of buying the stake at that price. The shareholders could either group to together to buy the stake or one company may take control of the 18% individually.

At the same time, pay-TV company Flextech is understood to have placed a bid for the stake. Flextech would have to wait, however, for C5’s shareholders to decline to buy the shareholding before it has a chance of making the acquisition itself. As well as Flextech, BSkyB has also been rumoured to have approached Warburg Pincus about the 18% stake.

The deal is expected to be closed by early next year and given that a price for the stake will probably be set around six weeks before a deal is closed, it is likely that Warburg has already, or is about to, offer a price to Channel 5’s shareholders. It is in the interests of these shareholders to play down their desire to buy the stake, as this may make it seem a less attractive purchase and thus generate a lower asking price at which they may then decide to buy. Conversely, Warburg will want to demonstrate a great deal of interest in the sale in order to push up the price.

The cost placed on the Warburg stake will put a fairly definite value on the whole of Channel 5 for the first time. Estimations of the station’s value currently range from £700 million to £1 billion.

Flextech: 0171 299 5000 Channel 5: 0171 550 5555