German TV broadcaster ProSiebenSat.1 Media AG said on Wednesday it bought rival SBS Broadcasting for 3.3 billion euros ($4.43 billion) to create Europe's second-biggest television provider.

The combination of ProSiebenSat.1 and SBS, both majority-owned by private equity firms KKR and Permira, will create a pan-European rival to market leader RTL Group, owned by German media giant Bertelsmann.

The new group will be active in 13 European countries, owning assets including 24 free TV stations, 24 pay TV stations and 22 radio networks, ProSiebenSat.1 said.

KKR and Permira bought SBS Broadcasting, which operates in the Netherlands, Scandinavia and eastern Europe, in 2005 for $2.5 billion. They went on to buy ProSiebenSat.1 last year in a deal valuing the company at about 5.6 billion euros with the goal of creating a pan-European broadcaster.

ProSiebenSat.1 and SBS broadcast a mix of entertainment, sport, news, documentaries and reality TV shows. Both groups generate huge advertising revenues.

ProSiebenSat.1 said the purchase would be financed entirely with new syndicated loans from a group of banks led by Bank of America, Calyon, Credit Suisse, HypoVereinsbank, JPMorgan, Lehman Brothers, Morgan Stanley and Royal Bank of Scotland.

The transaction was not subject to approval by antitrust or media regulators and the share purchase agreement would be completed by the beginning of July, it said, adding that projected synergies from the merger would be between 80 million and 90 million euros per year.


Analysts at brokerage Equinet said the acquisition price looks not too expensive and confirmed their hold rating and price target of 28 euros for ProSiebenSat.1.

Shares in ProSiebenSat.1 rose 2.36 percent to 28.99 euros by 0820 GMT.

Investors are keen to see what two large shareholders will do with their stakes in ProSieben and SBS.

Dutch Telegraaf Media Groep, which holds 20 percent of SBS, will record a book profit of around 360 million euros from the sale of its stake in SBS Broadcasting, the Dutch publishing group said.

TMG has an option that would give it 6 percent of the ProSiebenSat.1 Group's share capital, or 12 percent of the shares that carry the voting rights, ProSieben and TMG said in separate statements.

The option to buy about 13.1 million shares in ProSiebenSat.1 from Lavena, the holding company owned by KKR and Permira, at 34.71 euros per share can be exercised by June 1, 2008.

Lavena has a put option until August 15, 2008, to sell the shares to TMG at 28.71 euros per share. In both cases, dividends will be subtracted from the transaction price.

German publishing house Axel Springer holds a 12 percent stake in ProSiebenSat.1, which it originally wanted to buy, and has declined to say what it plans to do with its stake saying merely it wanted to keep all options open.

The publisher was not immediately reachable for comment.

ProSiebenSat.1 received shareholder approval late in March to evaluate a takeover of SBS.

SBS Broadcasting posted sales of more than 1 billion euros last year and earnings before interest, taxes, depreciation and amortization (EBITDA) of 207 million euros.

The new group would retain the name ProSiebenSat.1 Media AG and have its headquarters in Munich.