* Springer sells regional papers, TV guides, women's titles
* Funke Mediengruppe buys assets for 920 mln euros
* Timing fuels speculation before D. Telekom Scout24 auction
* Axel Springer shares up 16.8 percent
(Updates with Scout24 bid angle)
By Maria Sheahan and Arno Schuetze
FRANKFURT, July 25 Publisher Axel Springer
struck a 920 million euro ($1.22 billion) deal to
sell a clutch of Germany's best-known newspaper and magazines,
building up a potential war chest to bid for online classified
advertising business Scout24.
Deutsche Telekom, which owns Scout24, has asked
for tentative bids to be handed in by next Wednesday and expects
offers to value the group at no less than 1.5 billion euros ($2
billion), people familiar with the sale process said.
They were speaking after Axel Springer announced on Thursday
it was selling regional newspapers Berliner Morgenpost and
Hamburger Abendblatt, five TV programme guides and two women's
magazines, jointly accounting for about 15 percent of group
revenues, to Germany's Funke Mediengruppe.
"It looks like they are raising the necessary cash to buy
Scout," one banker said.
With print readership generally in decline, media groups are
increasingly moving online for growth. Britain's Daily Mail and
General Trust said on Thursday that while revenues
from advertising in its newspapers fell 7 percent in the third
quarter, they soared 41 percent at the papers' companion
Shares in Axel Springer, the top newspaper publisher in
Europe's biggest print media market, surged on news of the deal
climbing 16.8 percent to 40.335 euros.
Scout24, a bundle of Internet portals including European car
trading site AutoScout24 and real estate classifieds site
ImmoScout, could become one of only a few financially successful
investments for Deutsche Telekom, which bought it for 180
million euros in 2004 from Swiss private equity firm Beisheim.
Axel Springer, which has tied up with private equity group
General Atlantic, is one of the few strategic players taking
part in the auction, the sources said.
Other contenders to make it past a pre-qualifying round in
June include private equity groups like Hellman & Friedman,
Providence, CVC, EQT, KKR, Apax and
Silverlake, they added.
Deutsche Telekom is offering a 30 percent stake, but may be
lured into selling the whole unit if the price is right, one of
the people familiar with the auction said.
Deutsche Telekom, which is being advised by Goldman Sachs
and Jefferies, declined to comment, as did Springer and
the private equity firms apart from Silverlake, which was not
A 1.5 billion euro price tag would value Scout24 at 14 to 15
times earnings before interest, tax, depreciation and
amortisation (EBITDA), according to a source familiar with the
company. That is below a ratio of more than 20 for peer
Rightmove, according to Thomson Reuters StarMine data.
CUTTING OLD ROOTS
In fiscal 2012, the publications Axel Springer is selling
generated 512.4 million euros of revenues, and contributed 94.8
million euros to group EBITDA.
Among the titles to be shed is TV guide Hoerzu, a household
name across Germany. It became Axel Springer's first major
publication in 1946 and was also one of the first publications
to be licensed for sale in occupied Germany after World War Two.
Axel Springer created Hamburger Abendblatt, its first daily
newspaper, only two years later, followed by Bild and Die Welt
in 1952 and 1953. Chief Executive Mathias Doepfner said the Bild
and Welt groups were the company's clear focus.
Funke will pay 660 million euros in cash at closing of the
deal with Axel Springer or at the latest on June 30, 2014. To
cover the remaining price, Axel Springer will grant Funke a
vendor loan with a term of several years.
Axel Springer said final contracts would be signed as soon
as Funke has agreed the necessary financing, which will likely
be in the European autumn.
($1 = 0.7555 euros)
(Editing by Mark Trevelyan)