European broadcaster RTL Group said on Friday that it would sell its Dutch subsidiary RTL Nederland to Belgium-based DPG Media in a deal worth 1.1 billion euros ($1.21 billion) that will also see the two companies enter into a strategic partnership.
The deal comes nearly a year after Dutch competition authorities blocked RTL's plans to acquire rival Talpa, saying the merged group would be too dominant in the Dutch market.
"The merger of RTL Nederland and DPG is certainly the second-best option, but still a very good one," RTL Group Chief Executive Thomas Rabe told Reuters.
To be able to invest and compete with the likes of international streaming platforms such as Netflix (NFLX.O) and Disney (DIS.N), companies have to get bigger, said Rabe.
"If we cannot do this scaling through consolidation ourselves, then we are prepared to take other paths - such as this sale in the Netherlands," he said.
The purchase price comes with "a significant strategic premium and is well above current market valuation," said Rabe.
Subject to regulatory approvals, the all-cash transaction is expected to close around mid-2024 and the capital gain from the transaction will be largely tax exempt and will amount to approximately 800 million euros, according to the RTL Group.
RTL Nederland recorded an operating profit (EBITA) of around 69 million euros in the first half of 2023, with around 800 employees and sales of around 288 million euros.
As part of the sale, the companies will form a strategic partnership in the areas of advertising and streaming technology, international advertising sales and content.
"Together with our leading TV brands VTM and RTL Belgium, we will be able to build a group that has the necessary scale to invest in the digital transformation of television," DPG Media Group executive chairman Christian Van Thillo said in a statement.
The strategic partnership is set to last three years after the transaction closes, but Rabe said that if the collaboration goes well, there would be no reason not to continue.
"DPG is not active in the TV sector in the Netherlands. We therefore assume that the deal will be approved by the antitrust authorities," Rabe said.
DPG Media controls several national and regional Dutch newspapers and also owns the top-selling Donald Duck comic, as well as a number of popular women's magazines.
($1 = 0.9098 euros)
