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By Pierre Briancon
BERLIN, Sept 19 (Reuters Breakingviews) - Mathias Döpfner and KKR KKR.N have agreed on their conscious uncoupling. The co-owners of Axel Springer are parting ways in a 13.5-billion-euro breakup, after taking the German media group private five years ago for 8 billion euros including debt. KKR keeps the flourishing classified advertising business. CEO Döpfner walks away with the media unit he built, which includes German tabloid Bild and Politico – as well as a strong hand for future M&A.
The split seems based on a healthy valuation. The ads businesses, including jobs portal Stepstone, is valued at some 10 billion euros according to a person familiar with the matter, or 18 to 20 times expected 2024 EBITDA. That is way above listed peers such as German property-listing site Scout24 G24n.DE, and in line with the valuation multiple of British car-sales group Auto Trader AUTOA.L.
The media division, whose brands also include Business Insider and Die Welt, is valued at around 3.5 billion euros, or 12 to 14 times this year’s EBITDA, according to a person familiar with the matter. That is well below the 19 times 2024 EBITDA the New York Times NYT.N is trading at, but above the 11 times valuation multiple of Rupert Murdoch’s News Corp NWSA.O, which suffers from a governance discount.
KKR and its partner CPP Investments will control the most valuable part of the empire. Classifieds businesses are generally amenable to private-equity ownership because of their high margins and free cash flow. The investors are also walking away from controversies like a scandal involving Bild’s former editor in chief, or distractions like Döpfner’s offer two years ago to manage the social network once known as Twitter for Elon Musk.
Meanwhile the media unit will be nearly debt-free. And to make up for the valuation gap to the KKR-controlled unit, Döpfner and his associates, who own just over 50% of Springer, will also get minority stakes in the classifieds websites. These stakes can be monetised at a later stage, serving as M&A firepower. Former music critic Döpfner is counting on the global English-language news market, notably the United States, to make up for declining growth in ageing Germany. After trying in vain to buy the Financial Times in 2015, he went on to buy Politico. The Wall Street Journal looks like a possible future target, if Rupert Murdoch is willing to sell it. Döpfner gets a shrunken Springer, but regains freedom to grow.
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CONTEXT NEWS
Germany’s Axel Springer will split in two under a deal between CEO Mathias Döpfner and private equity firm KKR, the company said on Sept. 19.
Axel Springer's profitable classifieds companies will become separately held entities under the majority control of U.S. buyout firm KKR and Canada's CPP Investments.
Döpfner and Friede Springer, who is the widow of company founder Axel, will in combination own 98% of the media division, whose assets include Politico and Bild.
The two sides are valuing the entire group at 13.5 billion euros, Reuters reported citing sources, with the classifieds business accounting for the lion's share of it at around 10 billion euros.
(Editing by Liam Proud and Streisand Neto)
((For previous columns by the author, Reuters customers can click on BRIANCON/
pierre.briancon@thomsonreuters.com))