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German billionaire Mathias Döpfner and private equity group KKR are in talks to break up media conglomerate Axel Springer in a deal that would separate the group’s media assets from its digital advertising.
Under the proposed separation, Axel Springer CEO Döpfner and Friede Springer, the widow of the company’s founder, would take greater control of the group’s media assets, according to four people with knowledge of the matter.
These include US news sites Politico and Business Insider, and German publications Bild and Die Welt.
KKR and the Canada Pension Plan Investment Board, which together hold the largest stake in Axel Springer, will take control of its portfolio of advertising websites, including job platform StepStone and real estate advertising unit Aviv, the people added.
The possible split comes as Döpfner steps up his efforts to build influence in the US media. In 2021, Axel Springer bought Politico for $1 billion in its largest acquisition to date.
The company also tried unsuccessfully to buy the Financial Times in 2015.
Axel Springer’s classifieds business is growing faster and more profitable than its media business, two of the people said.
They added that taking control of the unit could help pave the way for KKR to begin exiting its investment five years after it partnered with Döpfner to take Axel Springer private.
But the people warned there was no guarantee of a deal.
Some people have said that since the classifieds business is likely to be more valuable than the news publications, Döpfner’s camp may also get cash or a minority stake in the KKR-controlled business. However, they added that such details have not yet been ironed out.
The deal could also pave the way for Döpfner to seek more acquisitions. People familiar with the billionaire former music journalist’s thinking say he has expressed interest in buying the Wall Street Journal, currently owned by Rupert Murdoch’s News Corp, if it goes up for sale.
Axel Springer spokesman Adib Sisani said the company does not comment on “market rumours”. He added that “all shareholders are very pleased with Axel Springer’s progress since its delisting in 2019”.
KKR said: “We do not comment on market speculation” and added that it “believes in the continued success and growth” of Axel Springer.
KKR agreed to pay nearly 3 billion euros in 2019 – at a premium of nearly 40 percent – ​​for a large minority stake to become a partner in Döpfner and delist Axel Springer. 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 own 48.5 percent of Axel Springer, cannot make decisions without Döpfner because of his special management rights. Döpfner holds about 22 percent of the equity, but has voting rights equivalent to twice that share.
Over the past year, Axel Springer has cut jobs in its German media operations and closed a number of regional offices, despite paying dividends of more than €750 million over the past four years.
Axel Springer planned an initial public offering for the StepStone job platform, hoping to value the unit at up to 7 billion euros. However, this did not materialize amid a dramatic slowdown in European listings.
The deal talks come as Axel Springer is embroiled in a dispute with hedge fund boss Bill Ackman. In January, Ackman threatened legal action against the company and Business Insider in an escalation of a bitter plagiarism battle against the billionaire’s wife.
An internal review by Axel Springer found that Business Insider’s reporting of plagiarism allegations against academic Neri Oxman was accurate and “well documented”.