Recoletos, majority owned by Pearson plc, is set to invest close to £50 million to strengthen its position as a market leading media group in the Iberian Peninsula.
Recoletos is seeking to purchase up to thirty percent of the shares of Unidad Editorial S.A. (Unedisa), publisher of El Mundo, one of Spain's leading daily newspapers, for up to 10,500 million pesetas (£43.6 million) in cash upon completion.
In a separate transaction, Recoletos has also agreed to pay Grupo Media Capital 1,631 million escudos (£5.6 million) for a 50% stake in Económica SGPS, publisher of Portugal's leading financial daily Diário Económico and weekly newspaper Semanário Económico.
Marjorie Scardino, chief executive of Pearson, said:
"These are significant steps in the strategy of building Recoletos as one of the most creative and profitable Spanish and Portuguese language media companies. The consolidation of these publishing interests further enhances Recoletos' presence as a leading media group in the Iberian Peninsula."
As a result, Recoletos and its partners will lead all other Spanish media groups with total daily newspaper sales of around 900,000 and with a total circulation of around half a million for weekly and monthly magazines in the Iberian Peninsula.
Recoletos is seeking to purchase a maximum of thirty percent from the 55% stake in Unedisa held by the four founders and promoters of El Mundo and some 400 small shareholders. The balance is held by the Italian Rizzoli group. In the event that less than twenty percent of the shares are offered, the transaction will not proceed. The transaction is subject to European regulatory approval. Recoletos has also signed a heads of agreement for the establishment of a joint news publishing venture with Rizzoli Group, 45% owners of Unedisa, in which each company will have a 50% stake and into which each party will in time contribute their shareholding in Unedisa.
El Mundo is one of Spain's most influential papers with an average daily circulation of over 300,000 in 1997. Unedisa also publishes two weekly magazines, has a range of educational products and owns printing presses in four Spanish cities. In 1997, Unedisa had a turnover of 23,400 million pesetas (£97.1 million) and a profit before tax of 2,013 million pesetas (£8.4 million). The net assets of the company as at 31st December 1997 were 10,603 million pesetas (£44 million).
Económica is one of Portugal's main publishers of daily, weekly and monthly market leading financial newspapers and magazines. In addition to Diário Económico and Semanário Económico, it publishes the weekly magazine Valor as well as the monthly magazine Fortuna. Diário Económico sells an average of 10,400 copies daily, the two weeklies combined sell 26,150 copies and Fortuna has average monthly sales of 26,300. Económica had a turnover of 1,659 million escudos (£5.7 million) and profit before interest and tax of 143 million escudos (£492,300) in 1997.
Recoletos owns Spain's leading financial publication, Expansión, as well as Europe's best-selling sports newspaper, Marca. In 1997, Recoletos established an alliance with Telefónica, the leading Spanish telecommunications company, to broaden its reach in the domestic market and in the Spanish and Portuguese speaking Latin American market. Recoletos has expanded its interests in broadcasting through Antena 3 and the recently launched business television channel, Expansión Financiera on the satellite digital platform, Via Digital, which is broadcast from Madrid to Spanish and Latin American financial centres. In September 1997, Pearson sold a 20% stake in Recoletos to Telefónica for £92.4 million and invested £46 million in taking a 10% stake in Antena 3. Recoletos achieved an operating profit of £30.4 million for the full year 1997 and an operating profit of £17.2 million in the first half of 1998.
Exchange rate calculated 26.11.98 £1 = 241 pesetas, £1 = 290.5 escudos
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