European media M&A market still strong

Despite the global credit crunch, European media merger and acquisition (M&A) activity remained strong in the first half of 2007 and is expected to hold up through the year ahead.

Media-related private equity transactions however were down slightly on the previous year.

The UK produced record M&A results for the year as a whole with deal completions rising by 9% to 75 last year and the total value of these deals soaring – largely due to the €13.5bn Reuters takeover by Thomson Corporation. Deal volumes in mainland Europe were level at 103 while overall value dipped.

Private equity interest and activity in the European media market did not disappear in 2007, despite the credit market situation. However, firms have had to adapt to the new conditions.

Deal activity by unquoted equity players declined slightly in 2007 following a record year in 2006 in the European media sector. Deal volumes returned to 2003 levels with 24 completions (2006 – 35). The aggregate value of these transactions was down to €12.5bn from €19bn in 2006 (a tally inflated by the €7.7bn private equity-backed purchase of VNU). Private equity accounted for 25% of the aggregate value of European media deals overall in 2007, compared with 44% in 2006 and 36% in 2005.

Mega private equity deals were mainly confined to the UK, with Terra Firma’s €3.1bn buyout of EMI and the €1.7bn disposal of Emap’s business-to-business (B2B) interests to Apax (in partnership with Guardian Media Group) although the €3.3bn ProSieben/SBS merger in The Netherlands was also private equity backed.