German media empire Axel Springer to split in deal with KKR

By Klaus Lauer

BERLIN (Reuters) -German media empire Axel Springer will be split between CEO Mathias Doepfner and private equity firm KKR, the company said on Thursday, in a deal that secures the billionaire chief executive's control over news titles Bild and Politico.

Axel Springer's profitable classifieds businesses are to become separately-held entities majority owned by U.S. firm KKR and Canada's CPP Investments, the media group said in a statement.

The two sides had reached a deal in the summer to split Axel Springer, a source told Reuters on Saturday.

The statement did not give a valuation for the company.

Sources told Reuters the sides currently value the whole company at 13.5 billion euros ($15 billion) with the classifieds business accounting for around 10 billion euros.

That would be around double the value given for the group when KKR entered as a strategic investor five years ago in a deal that preceded Axel Springer's delisting in 2020.

Axel Springer said a final agreement on the split was expected in the coming months, with the transaction expected to close in the second quarter of next year.

Founded by businessman Axel Springer in 1946 in Hamburg, the publishing house grew into Germany's most influential media group, with its right-wing, red-bannered tabloid Bild ranking as the country's most-read newspaper by far with a daily circulation of just under one million at the end of 2023.

Today, the media company has its sights on expanding its influence in North America, having bought political news outlet Politico for $1 billion in 2021.

IPO CANDIDATES

The deal to split Axel Springer would hand the group's media assets to Doepfner and members of the Springer family, including the 82-year-old Friede Springer, Axel's widow, who consolidated control over the business after his death in 1985, before gradually transferring power to her anointed successor Doepfner.

KKR and its partner CPP Investments currently hold a 35.6% and 12.9% stake in Axel Springer, respectively, while Doepfner and Friede Springer hold 21.9% and 22.5%.

In a letter to workers, Doepfner said Axel Springer would become a minority shareholder in the classifieds business, which includes job portal Stepstone and property website Aviv, with "probably about 15%" in exchange for the media assets.

Doepfner and Friede Springer's ideal scenario was that KKR and CPP "would either IPO the majority of the classifieds business, or take it over, with us holding only a minority stake in exchange for the entire media business", the CEO wrote.

Axel Springer had been preparing to float Stepstone but the planned initial public offering (IPO) was shelved when war broke out in Ukraine in 2022.

KKR and CPP are now likely to target an IPO in the second half of 2025, according to an industry source.

Aviv is also seen as a potential candidate for an IPO but sources say the company is not yet ready.

(Reporting by Klaus Lauer; Writing by Rachel More; Editing by Tomasz Janowski and Mark Potter)