Axel Springer: Media group to be split up

The rumor mill has been simmering for months, and now it has become official: Axel Springer SE, the largest German media group with over 18,000 employees worldwide, wants to split up. The company announced this on Thursday in Berlin.

The future corporate structure

In essence, the planned division looks like this: Friede Springer, the widow of the publishing house founder Axel Springer, and Mathias Döpfner, CEO and major shareholder, will receive control of the media business. This includes the tabloid “Bild” and the daily newspaper “Welt” in Germany, international media such as “Politico” and “Business Insider” as well as other brands such as the online comparison portal Idealo, Morning Brew, Dyn Media and Emarketer.

The remaining business areas (“classifieds business”) will in future be controlled by the American financial investor KKR together with the Canadian pension fund CPP Investments (CPPIB). These include the online job exchange Stepstone, the stock exchange website finanzen.net and the Aviv Group, which operates online real estate platforms such as Immowelt in Germany and Immoweb in Belgium.

Springer becomes a family business again

Friede Springer and Mathias Döpfner will in future hold almost 98 percent of the media part of the group, which will continue to operate as Axel Springer. The rest will be held by Axel Sven Springer, a grandson of Axel Springer, who was born in 1912 and died in 1985. The media group will thus become a purely family-owned company for the first time since its IPO in 1985.

In the remaining business areas under the name AS Classifieds, KKR and CPPIB will become the majority shareholders and the Axel Springer company will become the minority shareholder, with the grandchildren of founder Axel Springer also receiving an economic stake.

According to a letter from Döpfner to employees, which Springer published on Thursday, Axel Springer’s minority share in AS Classifieds will “probably be around 15 percent.” The exact stake is to be finalized as part of a binding agreement. The transaction, which is expected to be completed in the second quarter of next year, is also subject to various regulatory approvals.

To date, KKR holds 35.6 percent and CPPIB 12.9 percent of the share capital of the entire group. Friede Springer and Mathias Döpfner hold 22.5 percent and 21.9 percent respectively. Döpfner, who has been CEO since 2002 and was previously editor-in-chief of the “Welt” newspaper, has long been the strong man in the group: In 2020, Friede Springer not only gave him shares, but also transferred the voting rights of her own remaining share package. At the time, she justified this generosity by saying that she wanted to secure the future of Axel Springer.

With the split, Döpfner will become the de facto sole ruler of the media group. At the same time, however, he will only benefit proportionately from the income from the other profitable business areas.

Value almost doubled

KKR invested in Springer in 2019. The following year, the company was delisted from the stock exchange, followed in 2021 by the takeover of the American media company “Politico”.

According to the Financial Times (FT) and Handelsblatt, which cite insiders, the entire group will be valued at 13.5 billion euros as part of the transaction, of which around 10 billion euros will be attributable to the classifieds business. There is no official information on this, but the order of magnitude is likely to be correct: when KKR joined, the group was valued at around 6.8 billion euros. And in the aforementioned letter to employees, Döpfner writes: “In these five years, the value of the company has almost doubled.”

According to Springer, financial investors have enabled investments of over 1.9 billion euros in recent years to help the group accelerate its digital transformation and expand into new markets and business areas. Annual sales have increased by 30 percent to almost four billion euros in the past five years. Over 85 percent of this was realized in the digital sector last year.

Financial investors like KKR typically try to increase the value of a company after investing in it, before exiting after a few years with a profit, either through sales or IPOs. This means that the classifieds deals are unlikely to remain with KKR in the long term. An IPO of Stepstone was already planned, but was repeatedly postponed.

“Mathias Döpfner and I had a clear vision that Axel Springer would one day be a family business again. The fact that this vision is now becoming a reality fills me with great joy,” said the publisher’s widow Friede Springer, according to the press release. The privately controlled media company will also be debt-free.

Döpfner relies on AI

According to Döpfner, the separation secures the future of both parts of the company in the best possible way. The Springer boss is now faced with the challenge of profitably managing a smaller company focused on the difficult media business. “We want to become even faster, even more agile, even less bureaucratic. We are digital and transatlantic,” he states in the letter to employees. We must understand and shape the possibilities of artificial intelligence faster and better than our competitors and “focus even more on the market, customers and sales growth than before,” he continues.

Subject to the transaction being successful, the Springer boss also announced in the letter to employees a far-reaching restructuring of the top management. Among other things, Jan Bayer is to leave the board of directors and take over the chairmanship of the supervisory board from the USA. Overall, the management structure is to become significantly leaner.

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