ProSieben stock price plunges 6% as CEO dismisses merger rumours

Shares of ProSiebenSat.1 Media (ETR: PSM) have plunged more than 6% today after the CEO of the Germany-based broadcasting company rejected calls for European TV industry mergers, which may ultimately lead to a hostile takeover attempt from the Italian Mediaset TV corporation. 

Fundamental analysis: “Few synergies” in mergers – CEO

Rainer Beaujean, the newly-hired CEO of ProSiebenSat.1 Media, rejected calls for European TV industry mergers. 

“A trans-European merger would bring few synergies,” Beaujean said.

This way, Beaujean dismissed rumours that ProSiebenSat.1 Media is in talks with Berlusconi’s Mediaset or Daniel Kretinsky’s Czech Media Invest to merge. Both these companies own a double-digit stake in ProSiebenSat, with Mediaset’s stake believed to be around 24.2% and Czech Media owning a 10% stake.

Mediaset pressed Beaujean to come up with a credible growth strategy, which led to rumours that the Italian giant may launch a hostile bid. Beaujean also dismissed calls for a merger between the Munich-based ProSiebenSat.1 Media and RTL Group, two biggest German TV corporations. 

Instead, the CEO pledged to continue building “the leading entertainment and infotainment player in Germany, Austria and Switzerland”. He also said that the company plans to return to a payout of 50% of adjusted net profits next year.

Beaujean, who previously held the role of the CFO at ProSiebenSat.1 Media, became the new CEO in March after the abrupt departure of then-CEO Max Conze. 

“[ProSieben] will now return to focusing more strongly on our core segment of entertainment and on sustainably profitable business,” said Beaujean in March. 

ProSiebenSat.1 Media is Germany’s second-largest privately owned television company behind RTL Group. 

Technical analysis: Shares rotate lower

Following the establishment of a 10-year low in March, shares of ProSiebenSat.1 Media jumped around 100% to double its value in the past few weeks. More importantly, the stock price has managed to get above 10.70 again, which is an important bull/bear line for the stock. 

As seen in the chart above, the buyers stopped at the descending trend line that connects the lower highs. In order for buyers to break this series, a clean break above 13.00 is needed for the stock to get out of the bearish environment. However, the buyers are struggling to stay above 11.50, which is an important short-term level, hence we may see a deeper pullback in the coming days.

Summary

Shares of ProSiebenSat.1 Media have slid more than 6% today after CEO Rainer Beaujean rejected calls for a merger between some of the biggest European TV companies. His stance may eventually lead to a hostile bid from Berlusconi’s Mediaset, which owns a 24.2% stake in the Germany company.