Shed Media, the UK-listed independent TV production group behind the likes of Supernanny and Who Do You Think You Are, has been bought by the Americans: US giant Time Warner has taken a controlling stake as part of a £100m management buyout. So there could be a big payday for the ex-Granada execs behind the business - and since Warner plans to use Shed as a base to expand its European production, the company's future looks bright. Although the fact that Shed has been desperately trying to take itself private for years doesn't say much about the UK stock market's ability to value creative businesses...
Media entrepreneur Eileen Gallagher started Shed in 1998, along with three former Granada colleagues, and had an immediate hit with the popular Bad Girls series. The company was profitable from year one, and grew steadily until 2005, when it was floated on the Stock Exchange with a value of £45m; since then it's gone on to snap up four other small production companies, including Supernanny creator Ricochet, and Wall to Wall, which makes Who Do You Think You Are and recently won an Oscar for the brilliant Man on Wire documentary.
Shed seems to have got a good deal: the US company's subsidiary Warner Bros is paying 115p-a-share, a near-50% premium to the share price before the talks came to light (which explains why shareholders have been so quick to sign up). In return they'll get a 55.75% stake, not to mention 'immediate scale' in the 'important television market' that is the UK. The rest of the equity is being shared between 16 senior mangement (including Gallagher) who will get 21%, and another 27 key senior staff. So there are going to be a lot of happy faces at Shed today - based on that deal value, that's about a million quid each on average. Nice.
So the deal should be good for Warner, good for Shed and good for its staff. But it's worth noting that Shed has clearly felt for some time that the stock market undervalued its charms - management have been angling for a buyout since 2008, with its share price largely stuck on AIM, bumping along below its list price. Clearly it's hard for the market to get a handle on how to value creative businesses like this - particularly when they appear to be so reliant on a couple of particular franchises (which could lose favour with fickle TV viewers at any time).
But if Shed does go on to greater heights, it will be a shame that public company investors won't get to share in the upside. Should that happen, a few fund managers may be due some time on the naughty step.
In today's bulletin:
Investment banking sends Barclays profits soaring to £3.9bn
Warner Brothers wants to build a big Shed in the UK
Deluded managers misjudge their strengths
Google Waves farewell to collaboration app
UK's holiday memories spoiled by bulging inboxes