MARCH 27, 2000

EM.TV buys out F1 shareholders

THE German EM.TV & Merchandising company has bought 50% of the Formula 1 holding company SLEC in a deal worth nearly $1.6bn.

THE German EM.TV & Merchandising company has bought 50% of the Formula 1 holding company SLEC in a deal worth nearly $1.6bn. The previous owners of the shares made handsome profits with the investment house Hellman & Friedman, which bought 37.5% of the shares for $1bn only five weeks ago, rumored to have made a $200m profit on the deal and Morgan Grenfell Private Equity, which purchased 12.5% of the shares in October for $325m, having made a profit of $75m.

The deal is understood to have been brokered by Bernie Ecclestone who has also done well from the deal as the 50% of the company which his family still owns is now valued at $1.6bn, giving the Ecclestone family an extra $300m in paper worth.

The EM.TV purchase consisted of $712.5m in cash and 10m EM.TV shares which are currently worth around $88 each. Hellman & Friedman and MGPE agreed to place their SLEC shares in a new company called Speed Investment Ltd. and this was then sold to EM.TV.

EM.TV was established in 1989 by Thomas Haffa, a former Kirch Group executive who bought control of the rights to German language versions of cartoon produced by the Hanna Barbera company. His empire has grown dramatically in recent years and he now controls 24,500 half hour cartoon programs (four times more than Disney) including such famous names as The Simpsons, Tom & Jerry, the Pink Panther, Popeye, Peanuts, Woody Woodpecker and Betty Boop.

A month ago he bought the Jim Henson Company for $680m and now controls the Muppets and Sesame Street as well. Haffa has begun to produce his own cartoons and has launched his own German-language version of Cartoon Network called Junior TV which he expects to take global. Haffa's success is built not only on revenues from TV but also from selling the characters he has copyrighted in every possible form, notably through toys, books, games, videos and clothing. The properties under his control include the European rights to Elvis Presley, James Bond and Nintendo. The company has been listed on the Neuer Markt in Frankfurt for the last two and a half years during which times the shares have shot up in value.

Haffa says that his future strategy with F1 is not yet settled but it may end up being floated on the Frankfurt Stock Exchange.

Announcing the deal, EM.TV said that it was negotiating to buy control of SLEC from Ecclestone within the next 12 months. It is hard to imagine that Ecclestone will agree to such a deal and there have been suggestions that he may orchestrate another buyout within a few months once he has increased the value of the company by establishing a more effective merchandising operation for F1.