Valuation Problems For ElSitio.com Merger With Claxson Interactive Group.

El Sitio, Inc. and Ibero American Media Partners II Ltd. (IAMP) announced that they have agreed upon amended terms for their previously announced merger agreement to create Claxson Interactive Group Inc. IAMP is a joint venture between members of the Cisneros Group of Companies and affiliates of Hicks, Muse, Tate & Furst Incorporated (HMTF), and is the parent company of Cisneros Television Group.

The amended merger agreement revises the transaction terms originally agreed to by the parties in October 2000. Under the amended terms, each El Sitio common share will be exchanged for one new common share of Claxson. The combined company will have approximately 185.4 million common shares outstanding, of which approximately 45% will be held by members of the Cisneros Group of Companies, approximately 35% by HMTF, and approximately 20% by El Sitio shareholders (excluding IAMP). Prior terms called for El Sitio shareholders (excluding IAMP) to hold 34% of Claxson.

The amended transaction terms resulted from extensive discussions among the parties regarding whether the conditions precedent to the merger transaction were capable of being satisfied. El Sitio’s Board of Directors concluded that the amended terms of the merger transaction are in the best interests of its shareholders. In reaching this conclusion, El Sitio’s Board of Directors evaluated market conditions, trends affecting Internet companies, possible options to realize shareholder value, the effect of changes in El Sitio’s business on the obligation of IAMP, members of the Cisneros Group of Companies and HMTF to go forward with the transaction, and other factors.

The amended transaction terms have been approved by the boards of directors of both IAMP and El Sitio (excluding, in the case of El Sitio, the two directors designated by IAMP, who recused themselves). Subject to completion of the registration process with the SEC, approval of El Sitio’s shareholders and satisfaction of other closing conditions, the parties now expect the transaction to be completed in the third quarter of this year.

Under the amended transaction terms, Claxson will add two members to its Board of Directors, for a total of 12 directors. One additional director will be designated by each of HMTF and members of the Cisneros Group of Companies. In total, Claxson’s Board of Directors will include four directors designated by members of the Cisneros Group of Companies, three designated by HMTF, one designated by El Sitio’s founding shareholders, three independent directors, and Roberto Vivo as Chairman and CEO.

Claxson directors Eric C. (Rick) Neuman of HMTF and Carlos Bardasano of the Cisneros Group of Companies will serve as Vice Chairmen of the company.

Discontinuance of El Sitio’s E-Commerce Operations

El Sitio announced separately that it intends to discontinue the operations of DeCompras.com, its e-commerce business, during the third quarter of 2001. El Sitio plans to take this action in order to focus its financial and other resources on its core Internet media business.

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