German billionaire Mathias Döpfner and private equity group KKR are negotiating a break-up of media conglomerate Axel Springer, in a deal that would separate the group’s media assets from its digital classifieds operation.
Under the separation being discussed, Axel Springer’s chief executive Döpfner and Friede Springer, the widow of the company’s founder, would assume greater control of the group’s media properties, according to four people with knowledge of the matter.
These include US news sites Politico and Business Insider, and German publications Bild and Die Welt.
KKR and Canada Pension Plan Investment Board, who combined have the largest shareholding in Axel Springer, would take control of its portfolio of classifieds websites, including jobs platform StepStone and real estate ads unit Aviv, the people added.
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The possible split comes as Döpfner has been stepping up his efforts to build influence in the US media. In 2021, Axel Springer acquired Politico for $1 billion in its largest-ever acquisition.
The company also unsuccessfully tried to buy the Financial Times in 2015.
Axel Springer’s classifieds business is faster-growing and more profitable than its media business, two of the people said.
They added that taking control of the unit could help pave the way for KKR to begin exiting its investment five years after it partnered with Döpfner to take Axel Springer private.
The people cautioned however that there was no guarantee of a deal.
Some of the people said that since the classifieds business is likely to be more valuable than the news publications, Döpfner’s camp may also receive cash or a minority stake in the KKR-controlled business. However they added that such details were not yet ironed out.
A deal could also pave the way for Döpfner to seek further acquisitions. People familiar with the thinking of the billionaire former music journalist say that he has expressed interest in buying the Wall Street Journal, currently owned by Rupert Murdoch’s News Corp, if it came up for sale.
Axel Springer spokesperson Adib Sisani said the company does not comment on “market rumours”. He added that “all shareholders are highly satisfied with Axel Springer’s progress since its delisting in 2019″.
KKR said: “We do not comment on market speculation”, adding that they “believe in the continued success and growth” of Axel Springer.
KKR agreed to pay nearly €3 billion – with a premium of close to 40 per cent – in 2019 for a large minority stake to partner with Döpfner and de-list Axel Springer. It later sold some of its shares to CPPIB, which currently holds a 12.9 per cent stake in the company.
KKR and CPPIB, which together own 48.5 per cent of Axel Springer, cannot make decisions without Döpfner because of his special governance rights. Döpfner holds about 22 per cent of the equity but has voting rights equivalent to double this share.
Over the past year, Axel Springer has axed jobs in its German media operations and closed a string of regional offices, even as it paid out dividends of more than €750 million over the past four years.
Axel Springer had been planning an initial public offering for jobs platform StepStone, hoping to secure as much as a €7 billion valuation for the unit. But it has not materialised amid a dramatic slowdown in European listings.
The deal talks come as Axel Springer is embroiled in a spat with the hedge fund boss Bill Ackman. In January, Ackman threatened legal action against the company and Business Insider in an escalation of a bitter fight over plagiarism claims against the billionaire’s wife.
An internal review by Axel Springer found that Business Insider’s reporting of plagiarism allegations against academic Neri Oxman were accurate and “well documented”. – Copyright The Financial Times Limited 2024
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