US private equity group KKR has offered to buy out minority shareholders in German media group Axel Springer in a deal that values the publisher of the country’s best-selling newspaper Bild at €6.7bn.
The offer, which is pitched at €63 a share and is backed by Friede Springer, the widow of the company’s founder, and its chief executive, Mathias Döpfner, requires the approval of 20 per cent of the remaining shareholders, KKR said in a statement on Wednesday.
Mr Döpfner said that escaping the pressures of the public market would allow the company, whose businesses also include Die Welt and Business Insider, to make necessary investments in a business that has been wrestling with a tough advertising market. The company reminded shareholders of those headwinds on Wednesday by cutting its earnings expectations for the year.
“The strategic partnership with KKR would enable us to pursue major growth opportunities by providing additional financial capabilities while relieving the mere focus on short-term financial targets,” Mr Döpfner said. Ms Springer and Mr Döpfner own a combined 45.4 per cent of the company.
The offer represents a 40 per cent premium to Axel’s closing price of €45.10 per share on May 29, when news of the potential transaction first emerged. However, it is significantly below last year’s high of €73. Springer shares jumped 12 per cent in early trading.
Revenues and adjusted core earnings would decline over the course of 2019, Springer added. The group had previously forecast a rise in revenues and flat earnings for the year.
Analysts have pointed to investor unease over potential acquisitions and further investment as a key reason for the KKR deal. Among other targets, Springer is thought to be mulling an acquisition of eBay’s classifieds businesses, which is estimated to be worth about $10bn.
The deal comes at a time when private equity groups are hunting for acquisitions after raising their largest funds in record speed. KKR has been active in Germany, where it has invested more than $5bn of equity in about 20 companies in the past two decades. More recently, the US buyout group partnered with a large shareholder to acquire market research company GFK, a deal similar to the Springer transaction.
Before agreeing to pursue a deal with KKR, Mr Döpfner — who has been the driving force behind the bid — ran a process to vet a number of private equity firms interested in a such a transaction, one person close to the offer said.
“Building lasting and trusted relationships with companies worldwide is the core of what we do at KKR,” said Johannes Huth, KKR’s European head. “We are pleased to join Axel Springer on its journey ahead.”
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