After all, Cofina will not buy TVI

The media company Cofina announced this morning to the market that it was unable to complete the capital increase and, because of deteriorating market conditions, cancelled the purchase of Media Capital, owner of TVI.

In a statement sent to the Securities Market Commission (CMVM), the company led by Paulo Fernandes says that the acquisition fell apart and presents two reasons:

• It failed to complete the capital increase intended to finance the operation;
• Given the “deterioration of market conditions” caused by the coronavirus, the company says it is not possible to “launch a private offer to place the remaining shares”.

According to the media company, the conditions for the purchase of 94.69% of Grupo Media Capital’s share capital and voting rights held by the Spanish company Prisa are not met. “Therefore, the conditions on which the purchase and sale conclusion of Vertix’s shares (and indirectly of Media Capital) foreseen in the Contract are not met,” explains Cofina in a statement sent to CMVM.

The company had an ongoing capital increase of 85 million euros (through the issue of 188 million shares, sold at 45% each), an operation that would partially finance the purchase of Media Capital. On February 20th, the deadline for the acquisition on the Cofina stock market with preferential subscription rights for the new shares expired. The company now say “it is possible to conclude that the number of shares subscribed does not reach the total number of shares object of the public offering.”

Cofina expected to conclude the purchase of Media Capital in the second week of March, when it also expected to finish the capital increase. The merger between the two groups – Cofina and Media Capital – had already been validated by the Competition Authority and the Regulatory Authority for the Media (ERC) had also validated the change in ownership in favor of Cofina of all securities held by Media Capital.

Now the whole deal falls apart as Confina, Correio da Manhã owner, was unable to complete the capital increase to finance the purchase. In the last three weeks, the stock markets have tumbled because of the coronavirus epidemic, a factor that will have weighed on the shareholders’ decision not to carry out the capital increase.

This capital increase should have been subscribed by the current shareholders of Cofina and also by the businessman Mário Ferreira who, in case of success of the operation, would become the second largest shareholder of Cofina (with 15%), only behind Paulo Fernandes.

Besides the deterioration in market conditions, TVI’s accounts also suffered a setback as a result of the company losing its market leadership. At the end of February, Media Capital announced to the market that it had made losses of almost 55 million euros in 2019, the year in which it lost the audience leadership to SIC. In the previous year, in 2018, the group had made a profit of almost 22 million euros.

The loss of audience had already made Cofina review the price it was going to pay for TVI, at 50 million euros. At the time, it informed the market that Cofina and Prisa had agreed that the new purchase price would be ‘123,289,580 euros, assuming an enterprise value of 205 million euros’, i.e. 50 million euros less than the 255 million euros initially forecast.