Planned division of the Axel Springer group
According to the FT, which cited four people familiar with the talks, Mattias Doepfner, CEO of Axel Springer, and private equity group KKR are negotiating to split the group and separate its media assets from its digital advertising business.
That would mean Doepfner and Friede Springer, the founder’s widow, would have more control over the group’s media assets, including the German dailies Bild and Die Welt and the American news sites Politico and Business Insider. Meanwhile, KKR and the Canada Pension Plan Investment Board (CPPIB), which together hold the largest stakes in Axel Springer, would take control of the ad portfolio, including job listings StepStone and real estate Aviv.
Faster growth of Axel Springer’s advertising business
Two of the people cited said Axel Springer’s advertising business is growing faster and more profitable than its media business. They added that taking control of that part could help KKR begin to exit its investment, five years after it partnered with Doepfner to take Axel Springer private. But the people cautioned that there was no guarantee of a deal.
WirtschaftsWoche wrote that the talks about splitting the Axel Springer Group are not surprising. Recalling that KKR acquired a stake in Axel Springer in 2019, the weekly assessed that the fact that after five years the American company is “exploring ways in which an exit could look is not an affront, but part of the private equity business model: the investment horizon for private equity investments is usually three to seven years.”
German Media Industry’s Reactions to Group Split
But in the German media industry, the news has sparked reactions ranging from surprise to outrage. A spokesman for the German Association of Journalists (DJV) said they were “as surprised as anyone else” by the negotiations to split the group. On Friday morning, the union called on the group to provide clarity on possible split plans. “Both employees and the public are entitled to clarity. We are not dealing with a backyard handyman here, but with Germany’s largest media group,” DJV national chairman Mika Beuster explained.
According to Axel Springer employees, for months now there has been a “constant uncertainty about the future of one’s own work”. The latest reports of a possible split have reinforced this feeling. The DJV attributes this uncertainty primarily to Doepfner’s behaviour. According to the union spokesman, the group’s CEO played a “huge role” in this, because in the past he had made it clear through his business dealings that “profit comes first” and social responsibility comes second.
Doepfner’s Growing Influence in the American Media
The possible split, the FT wrote, comes as Doepfner steps up his efforts to build influence in American media. In 2021, Axel Springer acquired Politico for $1 billion, the group’s largest purchase ever. According to the sources, Doepfner expressed interest in buying the Wall Street Journal, currently owned by Rupert Murdoch’s News Corp, if it were put up for sale.
The FT recalls that KKR agreed to pay almost 3 billion euros in 2019 for a large minority stake to work with Doepfner and delist Axel Springer from the stock exchange. It later sold some of its shares to CPPIB, which currently holds a 12.9 percent stake in the company. KKR and CPPIB, which together hold a 48.5 percent stake in Axel Springer, cannot make decisions without Doepfner because of his preference shares. Doepfner holds about 22 percent of the shares, but has voting rights equivalent to twice that stake. (PAP)
