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Investing.com -- Banijay, an entertainment holding company with assets in content production and sports betting, is reportedly contemplating a potential deal with ITV (LON:ITV) or its studio arm, according to FT. The information was relayed by two individuals who are familiar with the situation.
Banijay has been working to improve its low liquidity situation, which currently stands at approximately 13%. The company has been focusing on this issue for the past year and a half. The company recently announced a CMD in mid-May, suggesting that it is eager to increase its visibility among investors and may be working on this matter.
However, Banijay currently lacks the necessary balance sheet to acquire ITV or ITV Studios. Therefore, any significant transaction would require equity financing. A liquidity event could take the form of a capital increase, followed by an acquisition of ITV or another type of partnership, such as a joint venture.
Analysts from Bernstein weighed in on the situation, stating that they have previously written about why a breakup of ITV makes sense. While synergies in a full acquisition would be limited, they see the rationale for it from Banijay’s perspective, as the company aims to consolidate the production sector in Europe.
Banijay’s large content library has helped the group navigate the past few challenging years for the production sector. Expanding Banijay’s library by adding ITV’s would allow for a spreading of group risk. The analysts also speculated that the group might build a broader streaming company, with ITVX, that could leverage a larger content library.
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