Bertelsmann facing IPO dilemma

The family controlling Bertelsmann, Europe’s biggest media company, will on Friday be presented with the choice of paying about €5bn ($6.1bn) to buy out its only independent shareholder, or acceding to a long-resisted market listing.

Groupe Bruxelles Lambert, the financial holding company part-controlled by Belgian financier Albert Frère, could announce plans for its 25 per cent stake in Bertelsmann as soon as on Friday, two people close to the situation said. GBL acquired the stake in 2001 when Bertelsmann bought GBL’s 30 per cent holding in RTL to take full control of Europe’s largest TV and radio broadcaster.

GBL has the right to seek an initial public offering of its stake from May this year, or could ask Bertelsmann and the Mohn family, which controls the remaining 75 per cent, to buy it out. Bertelsmann has the right of first refusal over the stake, estimated to be worth about €5bn.

A person close to Bertelsmann said the Mohn family had been against the idea of an IPO for years, despite public assurances to the contrary. The understanding on the German side had been that both parties would try to negotiate to avoid an IPO.

Should GBL exercise its option, the Mohn family would have to decide whether to allow an IPO to go ahead, or whether to borrow money in order to buy the Belgian stake and possibly sell a part of their empire to finance the deal, this person said.

Liz Mohn, wife of patriarch Reinhard Mohn, has long been looking for other solutions, people close to Bertelsmann said. In 2003 and 2004 she and Siegfried Luther, then chief financial officer, tried unsucessfully to win the support of Prince Alwaleed of Dubai and US media families.

GBL would not comment. Bertelsmann said it was a matter for GBL.

Liz Mohn, the family matriarch, has previously said she would not oppose a public offering of GBL’s stake and would not seek to buy it. Bertelsmann’s assets include Gruner & Jahr – an equal partner with Pearson in Financial Times Deutschland.

Separately, GBL confirmed on Thursday it owned a 6.5 per cent voting stake in Lafarge, the French cement maker, estimated to be worth about €980m.