A crisis is an excellent opportunity for bargain hunters. ‘For sale’ signs not only adorn homes at the moment, but businesses as well.
Publisher PCM Uitgevers, owner of titles that include NRC Handelsblad, is negotiating a capital injection from Belgian media group Persgroep, which will consequently become its new majority shareholder. The municipal and provincial shareholders of energy company Essent received a bid of over 8 billion euros last month from larger German competitor RWE. Three other foreign energy companies are in the race for a large package of shares in smaller rival Nuon. Energy company Eneco is also seeking an extra capital injection.
Foreign parties are making their move now that shareholders in the energy companies feel the risks of a liberalised market are too high. They are consequently selling the commercial activities of the energy companies. In the Netherlands the networks must remain under government ownership.
The energy sector, like other industries, is partly falling into the hands of foreign shareholders. Industrial conglomerate Stork, the largest supplier for the JSF fighter jet project, was taken over last year for example by Candover, a British-based private equity firm.
Failing advertising revenues
The sale of companies important to the country’s image is proceeding without delay during the economic crisis, perhaps even because of the crisis. The capital injection from the Persgroep, a Belgian family business with a range of media interests (Belgian and Dutch newspapers, television and radio) should help PCM weather the winter of falling advertising revenues. The proceeds will be used to repay bank debts.
PCM, publisher of national newspapers NRC Handelsblad, de Volkskrant, Trouw and – via a joint venture with Wegener - AD, will be the second major newspaper company to have a foreign majority shareholder. The Dutch media authority observed last year already in its most recent overview of concentrations in the sector (pertaining to 2007) that the interests held by foreign investors and financiers in the Dutch media were “unrelentingly high.” In the past few years British investment firm Mecom first took over two Limburg-based newspapers, and then also the listed company Wegener, publisher of a host of regional papers. Mecom is also under pressure from bank debts. The third major daily newspaper publisher, listed company Telegraaf Media Group, does have foreign shareholders, but 30 percent of its shares are held by one Dutch family.
The commercial television broadcasters like RTL and SBS, the two dominant cable companies UPC and Ziggo and production companies like Endemol are also in foreign hands. The Persgroep’s proposed majority participation in the PCM papers is hardly major news for politicians in The Hague or the newspapers themselves during a time of crisis. When British private equity investment group Apax announced a majority share in PCM five years ago, however, it made the front pages. In 2004 the situation involved a financier that wanted to reap considerable returns by selling its participation in the foreseeable future. Now the situation involves a shareholder who wants to remain an owner, but does acquire the right to sell one large newspaper.
“I find it worrying that a great many newspapers are now in danger of ending up under the control of one company,” says minister responsible for media Ronald Plasterk. “I’m not all that concerned about a foreign owner per se, but it may be more difficult to make a moral appeal to such an owner if a newspaper is doing poorly.”
Legislation
Other countries that are, like the Netherlands, traditionally open to foreign investors have separate regulations for approving foreign takeovers. The commercially liberal United Kingdom, for instance, has legislation to review foreign takeovers in the defence and media sectors in terms of criteria such as national security and multiformity of the media.
The Dutch parliament has repeatedly asked the government for its standpoint on the usefulness of such regulations for the Netherlands. One of the occasions that prompted such a request was the proposed sale of energy companies. Another was the political and social unrest about PCM’s high burden of debt when British private equity firm Apax was the dominant shareholder. The current burden of debt is to some degree a remnant from that financial adventure.
But the government does not support regulations like the British ones. At the end of 2008 the relevant ministers, Wouter Bos (finance), Maria van der Hoeven (economic affairs) and Ernst Hirsch Ballin (justice), wrote that introducing separate regulations would contribute little to Dutch oversight on mergers. They fear merger regulation would become overly ‘politicised’ as a result. But even more they fear the negative effects for the “open Dutch investment climate.”