U.S. private equity giant KKR announced on Wednesday it wants to make a voluntary public tender offer for the shares of European media giant Axel Springer.
KKR wants to take the owner of Business Insider and Bild private in a deal that puts the publishing company’s worth nearly $8 billion.
KKR offered investors in Axel Springer $71.40 per share in a deal that has support from the company’s largest shareholder, Friede Springer, as well as the firm’s CEO Mathias Döpfner.
The offer values the Berlin-based company at $7.7 billion. The price is a 12.5% premium over Tuesday’s close and an increase of nearly 40% from late May when talks between the companies were first reported.
“Building lasting and trusted relationships with companies worldwide is the core of what we do at KKR,” said Johannes Huth, member and head of KKR EMEA.
“We have a long track record of collaborating with entrepreneurs, families, leaders, and founders who are looking both for capital and a strategic partner who supports their vision,” Huth said. “We are pleased to join Axel Springer on its journey ahead.”
Axel Springer, which owns a range of publications, including the top German tabloid newspaper Bild and the website Business Insider, has been under intense pressure from investors in recent months.
“Axel Springer has undergone a successful period of digital transformation from which the company has emerged as a leading European digital powerhouse,” said Phillipp Freise, member and head of KKR’s European technology, media and telecommunications industry team.
“In light of the fast pace of change in the media sector, Axel Springer now needs continued organic investments and successful execution of its strategy so that the company can take advantage of the opportunities ahead,” Freise added. “We look forward to supporting Axel Springer in tackling these challenges in a long-term and sustainable manner.”
Friede Springer, the widow of founder Axel Springer and owner of 42% of the company, said in a statement that partnering with KKR would allow for new investments.
“Our journalistic principles and our corporate culture remain the foundation on which we build and in which we trust,” Springer said. “KKR would be a good partner who sees this the same way and with whom Axel Springer could take the next major growth steps.”
Döpfner, CEO of Axel Springer, said in a statement that going private will allow the publisher to shift its focus away from short-term financial targets.
“Our growth plan will require significant investment in people, products, technology, and brands over the next years,” he said. “KKR is a long-term focused partner who respects and supports our commitment to independent journalism and our purpose of enabling free decision.”
The publisher said Wednesday that it expects revenue for the current financial year to decline “in the low single-digit percentage range.” It also expects profit to fall.
Axel Spring has said that tougher economic conditions and the introduction of a digital tax in France forced the company to change its forecast.
Axel Springer also operates a 50-50 joint venture that publishes the European edition of Politico.
KKR has a history of being comfortable with media investments. In February, KKR bought Tele München Group, one of Germany’s largest television production companies.
Analysts said in a research note that going private could increase Axel Springer’s flexibility, especially if it seeks to acquire additional classifieds businesses, such as parts of eBay. In March, eBay said it is considering a spinoff of its classifieds business.
Julian Deutz, CFO of Axel Springer, said that as management of Axel Springer, “we are fully focused on achieving the best possible outcome for our shareholders,” he said. “The offer of ($71.40) represents an attractive premium and is the result of a thorough process organized by the executive board.”
The executive board and supervisory board of Axel Springer welcome strategic partnership with KKR and intend to recommend that shareholders accept the offer, Deutz said.
The offer is subject to a minimum offer acceptance of 20% of Axel Springer’s share capital.