Once You Raise the Money, You Must Spend It

Dogan Yayin Holdings (DYH) subsidiary and Turkey’s major media house Hürriyet announced in Moscow last Friday (January 5) its offer to buy 100% of classified advertising publisher Trader Media East for €377.5 million (US$500 million), €7.55 (US$10) a share. The deal will make Hürriyet one of the world’s biggest online and offline classified advertising companies. The company owns the two major newspapers and two major television networks in Turkey.

The one immutable law of finance is that money never stops moving. Every venture capital and private equity firm lives by this law. Once raised, the money must go somewhere. For this reason the corollary is that there are no lost deals. Media companies, flush with cash, are quickly moving from one deal to another.

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It has been slightly more than a year since ProSiebenSat1 major shareholder Haim Saban opened the bidding for his shares, ultimately opening the bidding for the entire company. First to the table was Axel Springer: the German publishing giant had both money and desire for television. Without repeating the entire story, It was a deal not to happen.

But Axel Springer CEO Matthias Döpfner had been to the investment bankers, saying something like “I need about €3 billion for acquisitions.”

Any investment banker lucky to get the phone call from Döpfner, who’s company throws off millions in profit each year, has one answer:”Yes, sir. And where would you like it delivered?”

So there was a little problem clearing up the paper work and the deal didn’t take place. Axel Springer still had the absolute attention of those investment bankers who only live and breath for deals. Since November, Axel Springer has acquired 25% of Poland’s Telewizja Polsat for €250 million (US$333 million) and 25% of Turkey’s Dogan TV, a subsidiary of the aforementioned Dogan Yayin Holdings (DYH), for €375 million. Döpfner also did a small pre-Christmas deal in Switzerland buying publisher Jean Frey AG for €87 million, adding to the existing and wholly owned Handelszeitung Publishing Group.

When the second bidding for ProSiebenSat1 came around the biggest of the big private equity groups circled, as they do. And so did DYH, itself raising billions. KKR and Permira won ProSiebenSat1. Axel Springer still holds about 12% of ProSiebenSat1.

TME publishes 178 titles and 11 websites in Belarus, Croatia, Hungary, Kazakhstan, Lithuania, Poland, Russia and Ukraine. It was founded in 2005 and is based in Amsterdam and listed on the London Stock Exchange. Directors of both companies approved the deal last week.

Making the announcement, Hürriyet CEO Vuslat Dogan Sabanci said, “the offer is an important step towards Dogan Yayin’s stated strategy of becoming a major international force.”

The annual World Economic Forum Davos deal-fest takes place at the end of January. Rumor has it all the major media deal-makers and shakers will be there…and not for the scheduled meetings. There’s still a lot of money floating around. Neither KKR nor Permira have made a media deal in at least two weeks.

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Once You Raise the Money, You Must Spend It

Dogan Yayin Holdings subsidiary buys Trader Media East for €377.5 million.