Media Tycoon Wins Bidding War for Italian Publisher

The former aide to Silvio Berlusconi secures nearly 49% of RCS MediaGroup.
By Renee Cordes ,

Italian newspapers got some juicy headline fodder Monday when a former Silvio Berlusconi aide-turned-media tycoon claimed victory in a bidding war for the influential publisher of top-selling daily newspaper Corriere della Sera.

Urbano Cairo, the self-made entrepreneur who served as Berlusconi's personal assistant in the 1980s long before the latter became the country's prime minister, secured 48.82% of Milan's RCS MediaGroup, Cairo Communication announced today. The cash and shares offer reportedly implies an enterprise value of €1 billion ($1.11 billion).

That makes Cairo RCS's new controlling shareholder, after surpassing the 37.7% achieved by Swiss private equity shop Investindustrial Holdings and a group of existing investors led by 9.93% shareholder MedioBanca. That consortium had made an offer in May valuing the target's stock at €373 million to upstage Cairo's original all-paper bid that valued RCS at just over €276 million.

RCS shares were down 5.27% in Milan on Monday afternoon at €0.89, giving it a market value of around €461.3 million. Cairo Communication slid 6.77% to €4.10, for a market capitalization just below €324.65 million.

Cairo raised his bid three times before leaping ahead of the consortium, which also includes UnipolSai Assicuraziona, Pirelli and RCS itself, which holds 7.325% of the shares in treasury. On Monday, Cairo was reported to have said his group wants all powers on RCS's board while the losing consortium said it would return all shares tendered in its bid, Reuters reported.

Cairo has targeted about €26 million of merger cost savings and has promised to turn around a company hurt by declining readership and advertising revenues.

He has experience in that field, having bought the money-losing La7 television channel Telecom Italia for about $1 million in 2013 which he later made profitable through cost cuts. He also owns the Turin soccer team Torino Football Club SpA. He founded Cairo Communication in 1995, originally to focus on advertising, and envisions a new publishing empire to take on Italy's powerful Agnelli and De Beneditti families, who own the recently merged La Stampa and La Repubblica newspapers.

RCS has 2015 sales of around €1 billion and net debt of €487 million, while Cairo Communication had full-year revenue of €260 million.

Cairo has insisted that his original offer wasn't hostile, despite the fact that he hadn't given the target's board a heads up. He also said in April that Corriere della Serra will remain independent if his bid succeeds.

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