Deal or no deal for ITV and Endemol?

ITV shares were up 3.3pc yesterday after The Telegraph revealed that it has been in talks with Silvio Berlusconi’s Mediaset – one of Endemol’s shareholders – about a potential takeover deal.

Endemol – which earned about €140 million last year on earnings before interest, depreciation, amortisation, taxation – will be looking for a deal to boost profits and attract new talent (and sort out its debts, which are well over £1.77 billion), but commentators suggest it might not be a good move for ITV.

The Guardian‘s Dan Sabbagh says “Amy Childs may be a hit on Big Brother, but that doesn’t mean Endemol is worth ITV wasting a penny on”.

In terms of debt, Endemol is a real problem, according to Sabbagh. “The first problem is to restructure the debt. No sane outside investor would want to get involved before,” he said.

“Endemol is realistically worth €1.5 billion (including debt) in a takeout situation – €500 million less than the face value of its outstanding loans. It may be transfer deadline day, but with an unimpressive pound-euro exchange rate, for ITV that is a lot of money.”

However, Damian Reece, head of business at The Telegraph, says “Endemol ticks all the boxes for an acquisitive ITV that needs hit shows and formats that not just sell internationally, but are made internationally too. So there is a desire on the part of ITV to do a deal too”.

Read the full reports via The Guardian and The Telegraph.