UPDATED: TVN and Ringier Axel Springer agree on strategic partnership for Onet.pl

(Adds info about the deal)

According to Reuters,  Ringier Axel Springer (joint venture between German publisher Axel Springer and Swiss firm Ringier) has won regulatory approval to buy Poland’s No.1 web portal Onet.pl, boosting its online position in eastern Europe.

Polish anti-monopoly watchdog UOKiK cleared the deal, in which the joint venture agreed in June to pay 956 million zlotys ($306 million) for 75 percent of Onet from Polish broadcaster TVN.

The Ringier Axel Springer deal valued Onet at 1.275 billion zlotys, below the figure in TVN’s books, but more than analysts’ expected. The price for the 75 percent stake could still increase to over 1 billion at the deal’s closing, expected at the turn of the year.

On June 6th, TVN, the leading Polish Media Group, announced that it reached an agreement with Ringier Axel Springer Media AG (RAS) to form a strategic partnership for Grupa Onet.pl.

In implementation of the partnership, TVN will contribute 100% in Onet to a newly formed Holdco in return for a cash consideration of PLN 956M (approx. EUR 217M) and a 25% direct interest in Holdco, with 75% held by RAS.

Valuation of Onet implied by the transaction amounts to PLN 1.275M. For the TVN owned 25% interest in Holdco the parties have agreed on reciprocal put and call options. The TVN held put options for the entire 25% interest are exercisable on January 1, 2016 and April 1, 2017, respectively with the RAS held call option becoming exercisable on January 1, 2017.

This partnership with Ringier Axel Springer Media allows Onet to accelerate its dynamic business development and at the same time benefiting from the complementary strengths of the partnership, reconfirming its leadership position in Polish internet landscape. In parallel the cash consideration will strengthen TVN’s capital structure as we intend to use the proceeds to reduce our indebtedness – a key risk mitigating factor in the volatile and uncertain European macroeconomic environment

Markus Tellenbach

CEO  TVN Group

The closing of the transaction, expected for late 2012 or early 2013, remains subject to approval from the relevant regulatory authorities. The Management Board of TVN intends to use the cash proceeds to decrease TVN’s indebtedness.

The acquisition of Onet.pl is a milestone for our fledgling company, and Onet.pl is an optimal addition to our online portfolio. At the same time, after only two years, we have taken a major step towards achieving one of our most important goals: the expansion of our strong market position through investments in successful digital business models. Alongside each of its leading tabloid newspapers, in future Ringier Axel Springer Media will be running the clear market leader in three of four countries, in the area of digital media.

Florian Fels

CEO Ringier Axel Springer Media AG

Poland experiences an annual growth in Internet use of up to six percent. Here, especially in the areas of success-based marketing and searching, the Polish online advertising market is growing at an estimated 15 percent per year. And in comparison with other countries, growth is stronger than Western Europe in terms of expenditures for display advertising.

The acquisition of Onet.pl means that we can now quickly achieve the critical mass in the online area that is necessary to continue bringing attractive and innovative offers onto the market

Edyta Sadowska

General Manager Ringier Axel Springer Poland

TVN’s Management Board received two fairness opinions regarding the financial terms of the transaction from J.P. Morgan and Nomura, respectively.
Ringier Axel Springer publishes Poland’s top tabloid Fakt and a local edition of Newsweek, but has struggled to establish a significant online business in the largest market in eastern Europe.

Ringier Axel Springer Media AG is also present on Romanian market. Ringier is a leading integrated multimedia company with activities in Central and Eastern Europe, managing an extensive portfolio of over 70 print titles and more than 60 digital offerings in the expanding markets of Poland,  Czech Republic, Slovakia and Serbia.