Just days after its bid to acquire Univision Communications was rejected, Grupo Televisa said in a filing with the Securities and Exchange Commission that it will not contribute its shares in the Spanish-language broadcaster to the winning bidders, adding that it could start a rival network.
In a 13-D document filed with the SEC July 5, Televisa said it would not roll over its 11.4% stake in Univision to Umbrella Holdings, the entity led by Providence Equity and media investor Haim Saban that submitted the winning $13.7 billion bid for Univision June 26.
In the filing, Televisa also stated that if its holdings in Univision dip below 13.578 million shares (it currently owns 39.3 million), the Mexican broadcaster will be free to create its own U.S.-based Spanish-language broadcasting network to rival Univision.
Televisa, which supplies the bulk of Univision’s programming, had been expected to emerge as the winning bidder in the auction, which began in February. But the collapse of its consortium to buy Univision shortly before the deadline to submit bids tanked its efforts, and it submitted an 11th-hour offer June 23 that was considered to be too low.
Televisa has had a contentious relationship with Univision for years -- last year, it sued the Los Angeles-based broadcaster to nullify a 25-year contract, which expires in 2017, to provide programming to Univision. That dispute is still in the courts.
Umbrella Holdings -- which consists of private-equity firms Providence Equity, Madison Dearborn Partners, Texas Pacific Group and Saban -- offered Univision $36.25 per share for the company, which includes $12.3 billion in cash and the assumption of $1.4 billion in Univision debt. The deal, announced June 27, was expected to close in the spring of 2007.
Televisa is one of two Latin American programmers that held stakes in Univision -- Venezuelan broadcaster Venevision owns a 14% stake in the company. Venevision dropped out of the Televisa consortium late in the bidding process.
Miller Tabak analyst David Joyce wrote in a research note Wednesday that the latest Televisa salvo is a setback to the winning bidders, but it should not jeopardize the closing of the deal.
“This could trigger, at closing, a breakdown of a participation agreement that in turn would allow [Televisa] to enter new business opportunities within the United States without having to offer [Univision] participation,” Joyce wrote. “This filing essentially sets into motion Televisa’s plan B.”
Televisa also hinted in the filing that it would be willing to sell its stake in Univision at prices comparable to the $36.25 per share of the Umbrella Holdings bid.
“Televisa is prepared to discuss with you a sale of its shares of Univision as soon as possible based on the present value of the price per share set forth in the merger agreement,” the broadcaster said in a letter to the winning bidders dated June 30.
Univision shares were down 32 cents each (1%) to $33.61 in early trading Wednesday. Televisa shares dipped 65 cents each (3.2%) to $19.81.