Axel Springer split could suit both parties’ needs
The author is a Reuters Breakingviews columnist. The opinions expressed are his own. Refiles to fix editing credit.
By Pierre Briancon
LONDON, July 12 (Reuters Breakingviews) -Five years after taking Axel Springer private, KKR and Mathias Döpfner may be about to part ways. According to the Financial Times, the German media giant is mulling a split that would see the U.S. buyout fund walk away with its digital classified division, while the group’s chief executive and part-owner would keep control of high-profile media assets like Germany’s largest newspaper Bild and U.S. publication Politico. If confirmed, the deal would mark the end of a peculiar governance arrangement, while allowing each side to focus on its own interests.
Half a decade is a typical length of time for private equity groups to hold assets. But the 2019 deal, which valued Springer at 8 billion euros including debt, had its idiosyncrasies: KKR acquired only a little over 48% of the company. Döpfner, together with the company founder’s widow Friede Springer, owns another 45%, as well as a majority of the voting rights. KKR has since sold a 13% stake to the Canada Pension Plan Investment Board.
What could have passed for a marriage of equals five years ago may in 2024 become a separation of unequals. KKR could end up with most of business, accounting for nearly 70% of Axel Springer’s current value including debt.
The German group does not publish detailed results, but ratings agency S&P estimates Axel Springer’s 2025 EBITDA at around 619 million euros. Before it delisted, 69% of the group’s EBITDA was generated by the classified unit and 31% by the media group. The respective shares of the businesses may be closer to a 60-40 split after a pandemic and energy crisis-fuelled recession and war in Ukraine, which hit advertising revenues hard.
Media peers like News Corp NWSA.O and the New York Times NYT.N trade at 10.5 expected EBITDA for 2025. On that basis Springer’s media business could fetch 2.5 billion euros. The classified division, using the 16 times average multiple of comparable listed groups Auto Trader AUTOA.L and Scout24 G24n.DE, would be worth almost 6 billion euros.
The gap in value helps explain why the FT also reckons Döpfner might keep a stake in the classified business after the deal, or be compensated in cash. That would in turn leave the German media tycoon free to pursue his strategy of slowly ditching the print businesses to become a pure player in online media. And of expanding beyond the confines of Germany, a fast ageing and slow-growing country, to gain a stronger foothold in the U.S. with new acquisitions. When the time comes to finance such deals KKR’s cash, or dividends, could come in handy.
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CONTEXT NEWS
U.S. private equity group KKR and Mathias Döpfner, the chief executive of German media group Axel Springer, are discussing a split of the German media group five years after taking it private, the Financial Times reported on July 11.
KKR would gain ownership of the company’s digital classified division while Döpfner would keep the media assets of the group, which include German daily newspapers Die Welt and Bild as well as Politico, the U.S. news site.
Axel Springer's shareholders https://reut.rs/4cCxsps
Editing by George Hay, Liam Proud and Streisand Neto
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