Lehman in for KirchMedia

The private equity arm of Lehman Brothers is sounding out a number of media groups over a joint bid for Kirch Gruppe’s broadcasting unit.

The private equity division of Lehman Brothers, which is already an investor in KirchMedia and Kirch PayTV, has emerged as a bidder for KirchMedia, the German media rights and broadcasting unit of Kirch Gruppe which filed for insolvency earlier this year.

The Financial Times reports that Lehman Brothers has joined forces with existing Kirch shareholder Mediaset of Italy alongside the investment vehicle of Saudi investor Prince Al Waleed to bid for the assets, which are being sold by the collapsed KirchMedia empire.

Other interested parties for Kirch's media business include a consortium led by US media billionaire Haim Saban and French TV group TF1, which submitted the highest bid to date of E2.6bn. A bid is also being co-ordinated by German Commerzbank and Sony’s Columbia Tristar unit. An offer of E1.4bn from a consortium led by German publisher Axel Springer was judged to be too low at the end of first round bidding, although this will not prevent Axel from tendering again in the latter rounds.

The list of three bidders was whittled down from an original list of seven, although the final list is likely to see a number of changes as the current round of offers is only ‘semi-binding’. Bidders will be given further access to company information as the sale enters its final stages. Lehman is reportedly involved in talks with a number of other media groups regarding a bid, including Axel Springer, whose first round consortium comprised fellow publishers Heinrich Bauer and Spiegel Verlag, and HypoVereinsbank, one of Kirch’s creditors.

Lehman Brothers Merchant Banking Group, the private equity division of Lehman Brothers, would be investing from its $2bn Merchant Banking Partners II fund. The fund targets US and European investments in the $50-400m bracket, but says it will invest as much as $500m. Since its inception in 1997, the fund has made approximately $1.6bn in investments across seven investments, including KirchMedia and Kirch PayTV.

This sale is expected to be completed by the end of August, with Kirch Gruppe and its creditors hoping for sale terms to be signed by mid-September.