Europe is to get its first pan-European broadcast and Internet giant following the announcement that Dutch cable giant UPC has agreed terms for the acquisition of SBS Broadcasting.

The deal, which has yet to be finalised and may require regulatory approval, values SBS at some $2.8bn in total. UPC's offer is a mixture of cash and stock and is equivalent to $85.14 per SBS share, which compares with a closing price of $60 yesterday.

The acquisition is the extension of an alliance previously hatched between the two companies that linked their media content and distribution capabilities. And in January SBS received a $162m cash injection when UPC bought shares that lifted its stake to 18%. With commitments made at the time of the takeover announcement, UPC already has approvals representing 40.9% of the fully diluted common stock.

The two companies have a good geographical and operational fit. SBS has operations based in Scandinavia, The Netherlands and Eastern Europe, while UPC's focus has chiefly been in Western Europe. SBS' acquisition and programming activities will complement UPC's Internet and cable delivery capacity. The combined group will have activities in 18 countries.

'SBS brings significant expertise in the development, acquisition and packaging of high quality content that we believe meaningfully enhances our ability to fulfil this [broadband] vision,' said UPC chairman and chief executive Mark Schneider. 'In particular this transaction will benefit our UPCtv and chello Internet divisions.' SBS' chairman and chief executive Harry Evans Sloan said: 'This is a natural alliance. UPC is a leading provider of cable services and content in most of our broadcast markets.

SBS and UPC had previously agreed to jointly create four new subscription TV channels and launch a new entertainment portal for European Internet users.

SBS yesterday announced end of year results for 1999 that saw new net revenue increase by 26% last year, but losses climb to $42.8m. The figures were also hit by a $9.8m write off relating to the company's aborted merger with Central European Media Enterprises (CME).

SBS and CME agreed a merger in March last year, but the deal was called off in October when it became clear that CME no longer had control of the operations it envisaged in the Czech Republic. SBS paid CME an $8.2m break-up fee and racked up other merger costs of $1.6m.