Springer bids for Scout24 in new digital push: sources
FRANKFURT (Reuters) - Axel Springer has made an offer for Deutsche Telekom's online classified advertising business Scout24, sources said, in another push into digital media that helped the German publisher beat earnings forecasts.
Springer, which publishes Germany's top-selling daily "Bild", has teamed up with private equity firm General Atlantic to bid for Scout24, two people familiar with the transaction said. Scout24, valued at about $2 billion, includes Internet portals such as European car trading site AutoScout24 and real estate classifieds site ImmoScout.
Springer, like other publishing and media groups is shifting online and away from print, where readership and advertising is in decline.
The Berlin-based publisher last month struck a 920 million euro deal to sell its regional newspapers Berliner Morgenpost and Hamburger Abendblatt as well as five TV program guides and two women's magazines.
Asked whether Springer had made an offer for Scout24, Chief Executive Mathias Doepfner repeated on Wednesday that Scout24 would be a good fit for the group but also cautioned that the publisher was not willing to overpay. He declined to comment further.
Deutsche Telekom had set a July 31 deadline for tentative bids. Second-round bids for the business - which bidders value at roughly 1.5 billion euros ($2 billion) - are due in late September, the sources said.
Other bidders include private equity firms Hellman & Friedman, Providence, CVC, EQT, KKR, Apax and Silverlake, according to the sources familiar with the transaction. All of them, including General Atlantic, declined to comment.
Deutsche Telekom declined to provide details on the auction, saying only that its strategic review of Scout24 had not yet been completed.
Axel Springer reported better-than-expected second-quarter profit on Wednesday as a result of its digital publications gaining traction.
Springer said earnings before interest, taxes, depreciation and amortisation (EBITDA), excluding special items, dropped 0.4 percent to 171.6 million euros.
That was above the most optimistic expectation of 165 million euros in a Reuters poll.
Axel Springer said its digital media now accounted for 40 percent of its revenue, and 45 percent of group core profit.
The digital media business includes online editions of Bild and Welt titles. Springer has introduced pay-walls for the online editions of these two. This began in December for Welt but for Bild it was introduced in June so only had a small impact on the second quarter.
"The digital segment is getting strong dominance in the business," said DZ Bank analyst Harald Heider, sticking to his 'buy' recommendation for the stock.
"We expect further acquisitions in the digital area."
Axel Springer shares were up 3.9 percent at 40.415 euros by 0531 ET at the top of a 0.7 percent weaker media index.
Axel Springer said it still expected 2013 core profit to decline by as much as 9 percent, while revenue would rise by less than 5 percent.
(Editing David Cowell and Jane Merriman)