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October 06, 2005

SBS Broadcasting Shareholders Approve Sale of Company

On Monday, SBS Broadcasting (SBTV) shareholders approved the deal to sell the company to private equity investors for 46 euros per share. According to the press release issued by the company, the deal is expected to close in late October. Sometime later this month, before final closing, the company will establish a record date for the liquidation distribution. The Euro-U.S. dollar exchange rate on this date will determine the ultimate price that U.S.-based investors who participate in the tender offer will receive....

...As of this morning the exchange rate is $1.2124 per euro. This equates to a deal value of $55.77. The latest quote on SBTV is $54.71, providing 1.9% upside assuming exchange rate are unchanged until closing.

I plan to accept the exchange rate risk and participate in the tender offer for all client holdings. I'm not a currency expert so don’t read anything into that choice. I am cautious near-term on the market so having a cash like position where the current 2% discount provides downside protection against a weak euro feels comfortable.

I don’t plan to post again on SBTV other than a brief note on the final exchange rate. It's been a great run and although I still feel a higher deal price was appropriate, Chairman Harry Sloan and CEO Markus Tellenbach have done a great job on behalf of shareholders. If Harry moves onto another public company, I'll be paying very close attention.

Posted by Steve Birenberg at October 6, 2005 12:37 PM in SBTV