* Company reckoned growth prospects didn’t justify price - source
* Private equity groups left in the race - sources
* Enterprise value seen at 1.6-1.8 bln euros - sources
By Nadine Schimroszik and Arno Schuetze
BERLIN/FRANKFURT, Sept 5 (Reuters) - German publisher Axel Springer has dropped out of the race for Deutsche Telekom’s Scout24, leaving buyout groups competing to buy the online classified advertising business.
A small group of private equity firms will be picked early next week to submit final bids by a mid-October deadline for a 30 percent stake in Scout24, three people familiar with the transaction told Reuters on Thursday.
Hellman & Friedman, EQT, KKR, TPG, Silver Lake and Providence could be among those asked for final bids, after submitting offers valuing Scout24’s debt and equity at 1.6-1.8 billion euros ($2.1-2.4 billion), the sources said.
A 1.5 billion euro price tag would give Scout24 an enterprise value of 14 to 15 times earnings before interest, tax, depreciation and amortisation (EBITDA), a source has previously told Reuters. That is below a ratio of 21 for British peer Rightmove, according to Thomson Reuters StarMine data.
“If the bid is high enough, Deutsche Telekom may be tempted into selling 100 percent of Scout24,” a person familiar with the deal said.
A spokeswoman for Axel Springer - seen as a likely buyer with the potential to reap the highest cost savings - confirmed that the publisher was, for now, no longer interested in Scout24, without elaborating.
Springer Chief Executive Mathias Doepfner has repeatedly said that Scout24, a bundle of Internet portals including European car trading site AutoScout24 and real estate classifieds site ImmobilienScout24, would be a good fit for the group but that he is not willing to overpay.
“Paying a top price and not getting control - that’s not something Springer wants,” a person familiar with the transaction said.
Another person familiar with the deal said that Springer may always come back to the negotiating table.
“With their announcement, they have mainly told their private equity contenders: we are not the one pushing up the price,” the person said.
The publisher had teamed up with private equity firm General Atlantic to make an offer for Scout24 as part of its push into digital media, sources told Reuters last month.
Scout24 could become one of only a few financially successful investments for Deutsche Telekom, which bought the business from Swiss private equity firm Beisheim for 180 million euros in 2004.
Deutsche Telekom and the private equity groups declined to comment except for Providence, which was not immediately available for comment.