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MEDIASET ESPAÑA: AGM APPROVES THE MERGER AND CREATION OF MFE, BUT IT IS NOT CLOSED YET (ANÁLISIS BANCO SABADELL)

In yesterday’s AGM both Mediaset Italia and Mediaset España approved the merger of both companies
However, we still see three hurdles to the merger: (i) the percentage of the shareholders opposing the merger and requesting a refund means (following a period set aside to place the shares) an amount of more than € 180 M (~5% NewCo); (ii) the courts rule in favour of Vivendi’s claim (Vivendi holds a 29% stake in Mediaset Italia), as the company has vehemently opposed the merger; and (iii) the company receives corresponding regulatory authorisation
We believe that the process could be slow and there are still a significant likelihood of the merger deal falling through, as it is facing a shareholding war.
We continue to take a cautious stance on TL5 due to the weakness and limited visibility of the advertising market, along with the deterioration of TV consumption. Furthermore, we maintain that the merger project does not value Mediaset España at attracitve prices. We would recommend that the shareholders that have voted against the merger request reimbursement (at € 6.54/sh., +8% vs. current share price). In any event, given the terms of the merger (more details on the next page), and due to the percentage of shareholders that have voted against it, we think it will be difficult to place the stake without the remainder exceeding € 180 M, and thus the likelihood of the deal falling through would be high.