By Klaus Lauer and Rachel More
BERLIN (Reuters) -German broadcaster ProSiebensat.1 on Wednesday pushed back against a plan by MFE-MediaForEurope to split up the company and called on shareholders to vote down its top investor's proposals at an annual meeting next month.
MFE, controlled by the family of the late former Italian Prime Minister Silvio Berlusconi, wants to spin off ProSieben's e-commerce and dating assets from the company's core TV operations.
The plan could help MFE mount a potential buyout for ProSieben's TV business, which MFE sees as crucial for its ambitions to build a pan-European broadcaster.
But ProSieben came out against the proposed split.
"In the opinion of the executive board and the supervisory board, a split-up ... lies in the unique interest of MFE, but not in the best interests of all other shareholders," ProSieben said in a statement.
The split would result in a significant increase in the financial leverage of ProSieben "and thus make strategic acquisitions just as impossible as a customary dividend policy", it added.
Shares in ProSieben fell by as much as 3.4% after the company's statement but had largely recovered their losses by early afternoon.
MFE said it was pleased that its proposals would be put to the annual meeting.
"This will give all shareholders of ProSiebenSat.1 an opportunity to independently decide by expressing their vote," an MFE spokesperson said in a statement.
VOTE NEXT MONTH
ProSieben's AGM is scheduled for April 30. The proposed spin-off needs a 75% majority to pass.
MFE would likely need the support of Czech investment group PPF, which holds a stake of over 15% in ProSieben. PPF declined to comment on the MFE proposals.
Both investors have nominated candidates for ProSieben's supervisory board, with MFE putting forward former Italian EY auditor Simone Scettri and Italian Citibank investment banker Leopoldo Attolico, while PPF has proposed Christoph Mainusch.
ProSieben recommended that shareholders reject the proposed candidates, arguing that their election "would lead to potential conflicts of interest and overrepresentation of the large minority shareholders".
MFE already operates commercial TV businesses in Italy and Spain. It holds a nearly 30% stake in ProSieben.
The Milan-listed media company sees cross-border deals as a way to tackle the growing dominance of U.S. streaming giants such as Netflix (NASDAQ:NFLX) and the flight of advertising investment to the likes of Facebook (NASDAQ:META) and Google (NASDAQ:GOOGL).
ProSieben has resisted MFE's calls to join the project and sought to develop a standalone strategy, with management pursuing the sale of certain investments in the Commerce & Ventures and Dating & Video segments in a bid to reduce debt.