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Circumstances May Stall Major Univision Suitors

Feb 13, 2006  •  Post A Comment

Univision Communications’ decision last week to put itself up for sale is likely to yield significant interest from a lot of different camps wanting to tap the exploding Spanish-language market, but it is also likely the ultimate buyer will come from the private-equity world, according to one analyst.

In a statement issued Wednesday, Univision said that as a way to boost shareholder value the board “has decided to begin a process to explore strategic alternatives … including, but not limited to, the raising of capital through the sale of securities or assets of the company, a recapitalization, strategic acquisitions and the combination, sale or merger of the company with another entity.”

Jessica Reif Cohen, a media analyst at Merrill Lynch, said in a research note that while big media companies will certainly be interested in the country’s largest Spanish-language broadcaster in terms of audience and revenue, some likely candidates will probably stay on the sidelines. The reason: A number of would-be suitors, including News Corp. and CBS Corp., will be hampered by ownership rules that limit media ownership. Both companies currently bump up against the 39 percent national coverage cap established by the Federal Communications Commission for the ownership of television stations by a single company.

That leaves companies such as The Walt Disney Co. and Time Warner as possible candidates. However, Ms. Cohen pointed out that Disney’s interests lie in other areas and that Time Warner might be too distracted fending off a proxy battle to consider a bid.

Then there’s the issue of price. Univision is said to be looking for a buyer willing to pay around $40 a share, which translates to around $13 billion. That’s more than a $5-per-share premium over Univision’s Feb. 9 closing price of $34.96.

How firm Univision will be on price will depend on its chairman and biggest shareholder, A. Jerrold Perenchio, who owns 11 percent of the stock and controls 56 percent of the voting power. Many analysts believe that putting the company up for sale is in part related to the 75-year-old Mr. Perenchio’s decision to cash out while the stock is performing well.

Regardless, one potential bidder has already drawn a line in the sand. News Corp. Chairman Rupert Murdoch said last Wednesday that while he might take a look at Univision’s assets, the price being bandied about all but ensured he wouldn’t make a play for the company.