TF1 switches gears, reduces Pathe stake
Company expected to eventually pull out
Paris' stock exchange regulatory body reported this week that TF1 had reduced its holding to 4.38%, and it widely is expected that the television company will withdraw completely.
TF1 sources said the Pathe maneuvers would not have a significant impact on the company's finances. TF1 invested just over 1 billion francs ($174 million) in Pathe, and analysts estimate that losses on the deal, due to a drop in Pathe share value, will be limited to around $2 million.
Merger rumors
TF1's decision to get out of Pathe effectively brings to an end a month of frantic activity involving some of the country's biggest media players. By buying into the entertainment group in January, TF1 chairman Patrick Le Lay fueled speculation that he planned an eventual merger between TF1 and Pathe.
As Pathe holds 20% of Canal Plus' digital platform Canal Satellite and TF1 is a shareholder of rival platform TPS, such a merger could have given Le Lay an entry into Canal Satellite.
However, Canal Plus and its parent company, Vivendi, reacted rapidly to the possible merger move by upping their stake in Pathe to 24.6% and signing a deal with Pathe chairman Jerome Seydoux that essentially protected Pathe from outside raiders.
That pact marginalized Le Lay, leaving him with a significant amount of cash locked up in Pathe but no real voice on the board.
