The deal would result in Megacable’s shareholders owning about 45% of the merged company with Televisa at about 55%, as revealed by Reuters.
Mexican broadcaster Grupo Televisa is offering to merge its cable and broadband unit Izzi with smaller rival Megacable, according to Reuters.
Megacable has not yet accepted the deal. The stock-for-stock deal between the companies would result in Megacable’s shareholders owning about 45% of the merged company with Televisa at about 55%.
Additionally, Televisa would offer Megacable shareholders a 14.8 billion pesos (US$ 744.94 million) special dividend at the deal’s close that would either be financed by third-party lenders or its own cash on hand, the letter said.
Megacable would remain publicly listed as the entity surviving the merger.
The new Megacable could end up with up to 40 billion pesos in new debt, part coming from Televisa and part being used to fund the special dividend, but Televisa said the combined company’s net leverage will be 1.5 times its annualized EBITDA based on third quarter results, which it said was below industry peers.
The combined company would have revenue of 75 billion pesos based on the companies’ results in the 12-month period ending Sept. 30, Televisa’s offer said.
“It is in the process of deliberation,” said the source, speaking of Megacable’s consideration of the offer, to Reuters.
Televisa claimed more than 62% of the pay TV market in 2021, while Megacable had about 21%, according to data from telecoms regulator the IFT. Televisa’s letter said the combination would create “one of Mexico’s leading cable operators, better positioned to compete than either one of us alone.”
