KKR, Axel Springer reach deal to break up the media giant
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Private equity firm KKR and German billionaire Mathias Döpfner have struck a deal to separate Axel Springer's classifieds business from its media properties, the firms announced Thursday morning.
Why it matters: KKR will officially exit the media business it helped fund and expand over the past five years.
- Axel Springer will become a fully privately owned and operated media company for the first time since the company's IPO in 1985.
By the numbers: KKR took Axel Springer private in a 2019 deal valuing the company at €6.7 billion. KKR and CPPIB, Canada's largest pension fund, own a 48.5% stake in the company
- The deal will give KKR and CPPIB control over Axel Springer's classifieds business, which includes jobs platform StepStone and real estate advertising unit Aviv.
- That business alone is valued at more than €10 billion, per the Financial Times. The agreement would value the whole company at €13.5 billion.
- In a statement, Axel Springer said its total revenue across both business lines grew by over 30% to nearly €4 annually during the five-year strategic partnership with KKR and CPPIB.
Moving forward, Döpfner and Friede Springer, the widow of the company's founder who currently serves as vice-chair, will control 98% Axel Springer's U.S. and European media properties, including Politico, Business Insider and German outlets Bild and Die Welt.
- Axel Sven Springer, one of the grandchildren of the company's eponymous founder, will retain the remaining shares.
- "It was Mathias Döpfner's and my vision that one day, Axel Springer would again be a privately owned and operated company. The realization of this vision now fills me with great joy," Springer said in a statement.
- Döpfner and Springer will keep a minority stake in the classifieds division. Döpfner will serve as CEO of the new media company.
Catch up quick: For the past few years, Döpfner has pushed to modernize and digitize Axel Springer's legacy media brands, while expanding its investment in U.S. digital outlets.
- In a statement, the company said over 85% of Axel Springer's revenue last year was generated from digital sources and €2 billion in revenue came from its media businesses worldwide.
- Axel Springer purchased Politico in a deal valued at roughly $1 billion in 2021. It acquired a majority stake in Morning Brew in 2020. The deal valued the millennial newsletter startup at $75 million.
- Prior to going private, the company acquired Business Insider for about $450 million in 2015. It also invested more than $20 million into Ozy Media, a now-defunct digital website, in 2014.
The big picture: The deal could free up Döpfner to pursue more media acquisitions as he looks to grow Axel Springer's U.S. footprint and increase its investments in artificial intelligence.
- Axel Springer recently invested in two AI media startups, Particle and ProRata.ai.
- Döpfner and Axel Springer established a U.S. headquarters in Manhattan last year and hired a U.S. executive leadership team.
- "In the new structure, we will have the very best requisites for a great future for journalism," Döpfner said.
Reality check: In divesting its stake in Axel Springer's news business, KKR separates itself from a very public and controversial industry.
- Axel Springer faced a sexual harassment scandal in Germany in 2022 and was caught in a messy spat with editorial leaders at Business Insider over an editorial investigation of the wife of billionaire Bill Ackman.
- In a statement, KKR co-founder Henry Kravis said the split was a "natural next step" after a long and productive partnership, and lauded Döpfner and Springer's partnership as "exceptional."
