LCTO moves into the big leagues, not that the market seems to care:
miami.internet.com
El Sitio, Cisneros Group Merge; AOLA Will Share & Promote Content
By William Plasencia
Ibero American Media Partners, the parent company of Miami-based Cisneros Television Group, will merge with the Latin
American internet portal company El Sitio, Inc., in an all-stock deal that's being billed as the first major convergence of new
and traditional media in the region.
In a related move, America Online Latin America (NASDAQ:AOLA) said it has agreed to carry the merged company's
content on AOLA's localized internet services in Brazil, Mexico and Argentina. The deal also calls for the companies to
promote each others services throughout Latin America, Spain and Portugal.
As part of the merger agreement, El Sitio said it would sell its internet service provider businesses in the region. News that the
deals were in the works were reported by miami.internet.com Thursday but were announced officially before Monday's
opening bell.
El Sitio (NASDAQ:LCTO) co-founder Roberto Vivo was named chairman and chief executive of the newly formed Claxson
Interactive Group, as the merged companies will be known as. Shareholders have yet to approve the merger.
The merger and cross-promotional deal is the first sign of a consolidation in the hotly competitive Ibero-American market. For
the ailing El Sitio, who's stock has been battered lately, it's a much-needed boost that gives the portal access to millions of
households in the region plus a "bricks-and-clicks" platform to build from.
"We will have a superb stable of content-driven brands," said Vivo. "The merged company will share a corporate culture of
rapid decision making, creative innovation and an international standard of professionalism, allowing us to quickly integrate and
immediately focus on bringing unique products to the consumer."
Rumors have been circulating that El Sitio was looking for a "white knight" when costs began to mount this year and its initial
public offering fizzled in the aftermath of April's stock market correction.
Plus the two companies have a shared pedigree: The Venezuelan media conglomerate Cisneros Group, with an 18% stake is
one of the largest shareholders in El Sitio as well as the main partner, together with America Online (NYSE:AOL), in the
joint-venture AOLA. Ibero American Media Partners is a joint venture of the Cisneros Group and Hicks, Muse, Tate & Furst,
Inc.
"The Cisneros had put a sizable investment in El Sitio, as well as in America Online, as a way of hedging their bets," said an
internet executive familiar with both companies. "I wouldn't be surprised if this had been part of the [Cisneros'] plan all along."
The new Claxson Interactive Group will combine assets in pay television, broadcast radio and television, plus the internet. The
company will be comprised of:
Cisneros Television Group, a global provider of Spanish- and Portuguese-language programming mostly through pay
television.
Broadcast television and radio assets that include Chilevision, Radio Chile and an investment in Caribbean Communications
Network.
El Sitio, which includes localized internet portals for Argentina, Brazil, Chile, Colombia, Mexico, the U.S. and Uruguay.
Under the terms of the merger agreement, which has been approved by the boards of both companies, outstanding shares of El
Sitio common stock will be exchanged for one new common share of Claxson Interactive Group. The new group's ticker will
change but for the time being will continue to trade on Nasdaq under LCTO.
Cisneros Group will hold the lion's share of ownership with a 37% stake, followed by 29% for Hicks Muse. The rest will be
held by individual and institutional investors. The combined company will have approximately 109.5 million common shares
outstanding,
On a pro forma basis for the 12 months ended June 30, the combined company had total net revenues of approximately $119
million, available cash of approximately $119 million, long-term debt of approximately $116 million and shareholders equity of
$409 million, according to the companies press release.
New chairman Roberto Vivo, will oversee the implementation of the integrated media company's growth strategy, which will
focus on leveraging traditional and new media platforms, as well as the development of "unique" interactive content, the release
said.
A conference call with investors and reporters is scheduled for 11:30 a.m, eastern standard time, in New York.
October 30, 2000 |
