TheDeal.com EM.TV scraps Muppets deal by Peter Lauria Updated 06:44 PM EST, Mar-7-2003 Kermit the Frog and Miss Piggy may have love, but as of Friday, March 7, they still don't have a home. Germany's EM.TV & Merchandising AG, parent company of The Jim Henson Co., terminated an agreement in principle with media entrepreneur Dean Valentine and investment firm Europlay Capital Advisors LLC to acquire 49.9% of the Muppet maker for $67 million. The decision to end the deal, originally struck two days before Christmas, was mutual, according to a statement released by EM.TV. But sources questioned whether there was truly a deal to terminate. "Valentine never had exclusivity, and I'm not sure he ever had financing," one source said. The deal's timing preceded by days a final loan payment EM.TV was to make to creditors. Shortly after the announcement, the cash-strapped company secured a one-month extension from its creditor banks. "The partial sale was initiated to permit EM.TV to pay the remaining amount due under the so-called 'Junior loan,' which financed EM.TV's 50% acquisition of its interest in the Junior.TV joint venture," EM.TV said. The 1998 joint venture with subsequently bankrupt Kirch Group was designed to accumulate children's programming under the umbrella of Junior.TV. Negotiations on a sale of Kermit's creator, now into their 18th month, will continue under a revised proposed structure. If they ever stopped, that is. Sources said several companies have been in active discussions with EM.TV about the Muppets. While Valentine and Europlay are expected to remain in the talks, one of the sources said that "a management buyout is something not being considered at the moment." Among those believed to have looked at Henson during the auction process are The Walt Disney Co., Viacom Inc., Saban Capital Group, Classic Media and London-based Entertainment Rights. EM.TV has until April 30 to repay the outstanding 25 million ($27.5 million) on its Junior loan. "A partial or complete sale of Henson will allow EM.TV to repay the loan completely, as well as to secure substantial liquidity for the EM.TV group," the company said.