ProSiebenSat.1 Seeks M&A in E-Commerce in International Push

(Bloomberg) -- Germany’s ProSiebenSat.1 Media SE wants to grow the $2.2 billion e-commerce business it runs with General Atlantic LLC through international acquisitions, targeting online startups in industries including dating and beauty amid sluggish growth in traditional TV.

The broadcaster has used advertising on its channels to boost holdings including online dating company Parship Elite Group and price comparison site Verivox, turning them into successful brands in Germany. But TV ads can do only so much before a foreign push is needed to unlock more growth, said Claas van Delden, the co-chief executive officer of NuCom Group, ProSiebenSat.1’s e-commerce holding company.

“We will set about internationalizing our portfolio first by way of acquisitions and second by having our investments enter additional markets,” van Delden said in comments emailed to Bloomberg News. “Abroad, we prefer to purchase entities with famous brands.”

ProSiebenSat.1 generates about 45 percent of sales outside traditional TV, and investing in online businesses was key to former CEO Thomas Ebeling’s plan to diversify away from broadcasting. Its practice of taking equity in startups in return for TV advertising last month prompted criticism from short-seller Viceroy Research, which caused a share slide. ProSiebenSat.1 quickly hit back at Viceroy, saying media-for-equity and media-for-revenue deals are proven strategies that provide valuable e-commerce expertise.

Improved Transparency

The company has improved the transparency when it comes to valuing its e-commerce startups by creating NuCom and winning General Atlantic as an outside investor, said Lucas Boventer, an analyst at Warburg Research.

“It could be a challenge to identify value-creating assets abroad because of the rather high valuations in the tech sector,” Boventer said. “General Atlantic, with its international know-how and broad network, is exactly the right partner to find the right targets.”

ProSiebenSat.1 is looking at 80 potential acquisition targets, with the e-commerce sector earmarked for 60 percent of the company’s future M&A spending, Chief Financial Officer Jan Kemper, a former executive of German online fashion retailer Zalando SE, said in December. Acquisitions will be made predominantly in dating, price comparison, beauty and event vouchers, van Delden said.

ProSiebenSat.1’s e-commerce business last year accounted for about a quarter of the company’s sales, ahead of its digital entertainment and content production businesses, yet behind its German broadcast business, which accounted for about 55 percent of revenue. ProSiebenSat.1 has done several e-commerce deals in the past three years, including its approximately 200 million-euro purchase of Parship Elite Group and its 235 million-euro acquisition of Etraveli, a travel startup it sold last year after more than doubling its enterprise value.

ProSiebenSat.1 is in a period of leadership transition after Ebeling said in November that he would leave before his contract term was up. The broadcaster in February named Max Conze, the former head of British vacuum cleaner maker Dyson Ltd., as its new CEO from June, ending months of uncertainty about who would succeed Ebeling.

General Atlantic in February bought a 25.1 percent stake in NuCom, which owns 10 assets including sex toy retailer Amorelie, gift voucher startup Mydays and perfume seller Flaconi, at an enterprise valuation of 1.8 billion euros ($2.2 billion). Total revenues at the commerce segment grew 34 percent to 820 million euros last year.

NuCom’s assets “have growth ahead of them, operate in an exciting market, and directly benefit from TV reach," van Delden said. “we wish to develop the enterprise into one of the leading commerce providers in Europe.”

©2018 Bloomberg L.P.

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