Possible merger offer with Izzi boosts the shares of Televisa and Megacable

Information about an offer from the Mexican media giant Televisa Group to merge its Izzi broadband and cable TV unit with rival Megacable fired both companies in the Mexican stock exchange (BMV).

At mid-session, Megacable titles gain 12.48% to 55.86 pesos, while for Televisa the news boosts its shares 9.96% to 21.52 pesos. In this way, Megacable reaches levels not seen since May and Grupo Televisa moves away from the lows of 2003.

The information was made known through Televisa’s offer letter this morning, to which Megacable has not yet responded, the Reuters agency said, based on responses from a source “with knowledge of this matter who provided a copy of the document.”

According to Reuters, Megacable shareholders would own around 45% of the merged company and Televisa around 55%. The transaction premium is 19% higher for Megacable than for Izzi, according to the Ebidta valuation of the letter.

Televisa’s shares have experienced strong pressure since their maximum of 59.83 pesos observed in July of last year, as a result of the merger with Univisión. If confirmed, this proposal would come after a series of spin-offs of large local firms.

Televisa’s letter details that the combination would create “one of Mexico’s leading cable operators, better positioned to compete than either of them alone.” It was unclear if the deal would face antitrust scrutiny.

jose.rivera@eleconomista.mx