Mathias Döpfner, a German billionaire and KKR, a private equity firm, are in discussions about dividing media giant Axel Springer. This potential deal could result in the separation of the company’s media holdings from its digital classifieds business. This development is based on insights from four individuals well-informed on the situation.
The division under consideration would allow Axel Springer’s CEO, Döpfner, and Friede Springer, the widow of the company’s founder, to gain a stronger hold of the company’s media assets. These encompass American news websites Politico and Business Insider, as well as German newsrooms Bild and Die Welt.
The largest shareholders, KKR and the Canada Pension Plan Investment Board, are anticipated to gain control of Axel Springer’s portfolio of classifieds websites, including job portal StepStone and property advertising branch Aviv.
The proposed division is happening as Döpfner bolsters his efforts to expand his influence in American media. In its biggest investment thus far, last year, Axel Springer bought Politico for $1 billion. However, a past endeavour to acquire the Financial Times in 2015 was unsuccessful.
According to two sources, the classifieds venture of Axel Springer develops faster and generates more profit than its media business. They suggested that gaining control of this division might allow KKR to prepare to withdraw its investment, an investment made five years ago when partnering with Döpfner to make Axel Springer private. The sources, however, mention that a deal is not assured.
As the classifieds business could potentially be more lucrative than the media publications, there is a possibility that Döpfner and his team might acquire cash or a minority stake in the KKR-run business, but these details are still being worked out.
A successful deal could provide a path for Döpfner to consider additional acquisitions. Those who know the ex-music journalist-turned-billionaire state he has shown interest in purchasing the Wall Street Journal, currently owned by Rupert Murdoch’s News Corp if an opportunity were to arise.
Both Adib Sisani, spokesperson for Axel Springer, and KKR declined to comment on the “market speculations”, explaining their satisfaction with the company’s progression since it went privat in 2019 for Axel Springer and their belief in the firm’s future growth for KKR.
In 2019, private equity firm KKR made the decision to purchase a substantial minority share in Axel Springer for just shy of €3 billion, a decision that meant they paid almost a 40% premium. A portion of these shares were subsequently sold to CPPIB, which now owns a 12.9% stake in the enterprise.
Currently, KKR and CPPIB collectively possess a 48.5% share in Axel Springer. However, due to his exclusive governance rights, decisions cannot be made without the input of Mathias Döpfner. Döpfner may only have around 22% of the company’s equity, but his voting rights are roughly twice as influential.
Over the last 12 months, whilst it has paid out in excess of €750 million in dividends in the past four years, Axel Springer has also cut many jobs in its German media wing and shut down numerous regional offices.
Furthermore, plans had been underway for an initial public offering (IPO) for StepStone, a jobs platform operated by Axel Springer. The company had hoped this would result in a valuation of as much as €7 billion for the unit. However, due to a significant slowdown in European listings, this has failed to come to fruition.
In the meantime, Axel Springer finds itself in the midst of a disagreement with the head of a hedge fund, Bill Ackman. In the opening month of 2024, Ackman levelled threats of legal proceedings at not only Axel Springer, but also Business Insider, escalating an ongoing dispute regarding allegations of plagiarism levelled at his wife.
Following an internal investigation, Axel Springer concluded that the claims of plagiarism made by Business Insider against academic Neri Oxman were both precise and supported by strong evidence. Copyright The Financial Times Limited 2024.