Investors seem to like the news that arrived from Cologno Monzese on Friday after the markets were closed, which will lead to one of the greatest revolutions in recent years in the European telecommunications market. At Piazza Affari the Mediaset share gains 5,4% to 2,842 euros, realizing one of the best performances of the entire list. On the other hand, the reaction of the Spaniards was different: in Madrid Mediaset España shares lost 4,4% to 6,63 euros. The performance of the European lists supported by the companies was generally positive positive news on the trade front after the halt of US tariffs on Mexican goods.
THE REORGANIZATION: MFE IS BORN
Three days ago the boards of directors of both companies gave the green light to the proposal reorganization which provides for the creation of a new parent company. The shareholders' meeting scheduled for 4 September will give the definitive green light to an operation that already appears clear: the new holding company will be born from the merger between Mediaset, Mediaset España and Mediaset Investment NV, a Dutch company which will be renamed Media for Europe (MFE).
THE EXCHANGE
The baby girl holding will be listed in both Madrid and Milan and will have its tax office in Italy and its registered office in Amsterdam. As part of the reorganisation, each Mediaset shareholder will receive one Mfe share for each stock held, while each Mediaset España shareholder will have 2,33 shares of the new holding for each stock held. Why so much difference? Because the shares of Mediaset España have a value almost three times higher than that of Mediaset shares. However, that may not be enough. The established exchange has made some analysts turn up their noses, according to whom the "compensation" for Spanish shares is less generous than that of the parent company Mediaset. Proof of this is also the fact that the dilution of the Biscione shareholders in the new entity will be lower than that of the Spaniards. The same goes for the withdrawal price (6,544 euros) which is calculated with the average of the last three months, and which is lower than various target prices for the group.
It should also be underlined that the treasury shares held by the two companies will not be exchanged and will be canceled on the date of the merger.
Once the rearrangement is complete, Fininvest will hold 35,43% of Mfe, but more than 50% of the voting rights, Simon Fiduciaria will dilute to 15,39%, Vivendi to 7,71% and the market to 41,47%.
ESTIMATIONS AND DIVIDENDS
According to estimates released on Friday, the birth of MFE will bring efficiencies and cost savings of approximately 100-110 million (before taxes) over the next 4 years (from 2020 to 2023), corresponding to a net present value of approximately 800 million euros. “They are conservative estimates – he underlined Marco Giordani, CFO of Mediaset, presenting the operation to analysts – we want to be sure of carrying them out in the next few years. €XNUMX million is the 'floor' level, but we are ambitious to achieve more savings and create more value”. Giordani then explained that the next step will instead concern many other development opportunities "especially on the revenue front": "We don't want to reveal" anything other than this at this moment, concluded Giordani, specifying that the goal is to become "bigger and international".
After the merger, MFE will distribute a dividend of 100 million to its shareholders euro and will launch a plan to buy back treasury shares for a total of 280 million euro. As part of the presentation of the deal to analysts, it was specified that MFE's dividend policy plans to pay out to shareholders "no less than 50% of net profits consolidated annual accounts” through ordinary dividends or other methods.
VIVENDI AND WITHDRAWAL
The operation is obviously conditioned by some stakes, first of all: withdrawal requests that the shareholders will have to present must not exceed 180 million euros. In any case, shareholders who do not participate in the approval of the merger resolution by the shareholders' meeting will be entitled to the right of withdrawal which provides for the payment of 2,770 euros (6,5444 euros for Mediaset España) for each share held.
The figures immediately made Vivendi think: if the French exercised the right of withdrawal on their share (9,6%), the total amount to be paid to Vivendi (about 300 million) would be well above the maximum ceiling of 180 million euros indicated as the condition precedent of the operation . “I think that would be a bit irrational” for Vivendi not to participate in the MFE operation and to exercise the withdrawal both from a financial point of view and from a strategic-industrial point of view, “but it is their choice”, said Marco Giordani, CFO of Mediaset, responding to a question from an analyst regarding Vivendi's position. Giordani recalled how "from a technical point of view Vivendi can exercise the right of withdrawal", however "I believe they will be willing to take part in the project".
