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EM.TV goes under 20 Euros

THE share price of Thomas Haffa's EM.TV media company rose towards the end of last week to just below 30 Euros ($25) but this week the shares have been falling steadily and on Thursday morning they dipped below 20 Euros ($17) for the first time. This reduced the value of the company to just over $2bn which a few weeks ago (when the company was valued at $8bn) was Haffa's asking price for his 50% share of Bernie Ecclestone's Formula One group of companies.

The lack of shareholder confidence in EM.TV seems to have now gone beyond the decision to buy into F1 and is more a question of whether the management is capable of running the business and with the share price continuing to fall the markets are still not convinced of that.

One possible scenario now is that Ecclestone may buy back the shares which Haffa bought in the Spring from a couple of financial institutions which had purchased them from Ecclestone. At the time Bernie received $325m from Morgan Grenfell Private Equity and then $1bn from American investment company Hellman & Friedman. They later joined forces and sold the F1 shares to EM.TV for $712.5m in cash and $880m in EM.TV shares.

Ecclestone is unlikely to pay more than he gained to buy back the company but Haffa may now settle for as little as $1.3bn simply to help EM.TV recover at least some of its value although it may take his resignation before the price bounces back to a level at which the value of the company is about the same as the assets it holds. Buying back the shares would then enable Ecclestone to push ahead with negotiations to sell a share in the company to the Formula 1 teams, engine manufacturers and car companies.

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