(Bloomberg) -- KKR & Co. and German billionaire Mathias Döpfner agreed to split up media conglomerate Axel Springer, separating its fast-growing classifieds units from its news businesses.
The deal values the whole company at €13.5 billion ($15 billion), including more than €10 billion for the classifieds businesses, people familiar with the matter said, asking not to be identified as the details aren’t public.
The group’s media assets, including Politico and Business Insider in the US and German newspapers Die Welt and Bild, will remain within Axel Springer as a closely held business owned by Döpfner and Friede Springer, according to a company statement on Thursday.
Four classified ad websites, including jobs platform StepStone and real estate ads unit Aviv, will be spun off as separate joint ventures in which KKR and Canada Pension Plan Investment Board will be majority shareholders. Axel Springer’s stake in these companies will be about 15%, Döpfner said in a message to employees.
The deal took a year to negotiate and creates a structure in which Axel Springer’s “journalism would be securely anchored in a family-run publishing house,” Döpfner wrote.
The split allows KKR to focus on the more profitable classified business at a time when the news industry globally is struggling to make money. It comes after several controversies at Axel Springer’s media division in recent years.
‘Project Berlin’
Philipp Schaelli and Johannes Huth led negotiations on the KKR side, the people said. The sides reached a non-binding agreement in July, though talks remained deadlocked in the final weeks over the new businesses’ ownership structure, including the stake founder Axel Springer’s grandchildren would receive.
The negotiations, dubbed “project Berlin,” saved the question of who would run the new businesses for last to avoid derailing the talks, according to the people.
Spokespeople for Axel Springer and KKR declined to comment on the businesses’ valuations or how the deal came together.
Döpfner and Springer — the widow of Axel Springer’s eponymous founder who controlled the company for years after his death — teamed up with KKR and CPPIB to take the company private in 2020, valuing it at €6.8 billion at the time.
US Expansion
KKR and CPPIB own 48.5% of the company while Springer and Döpfner, Axel Springer’s chief executive officer, control about 22% each.
Under Döpfner’s leadership, Axel Springer aggressively expanded its digital offerings in the US over the last decade, buying Business Insider in 2015 and Politico for about $1 billion in 2021. It was also one of the first big media brands to strike a deal with Sam Altman’s OpenAI, agreeing to a three-year contract to let the generative AI company use its news articles and content.
Axel Springer’s annual revenue is nearly €4 billion, according to the company. The media business generates about half of the sales and one-third of the profit, Döpfner said in his message.
The deal is expected to close in the second quarter of 2025, pending regulatory approval. After that, Döpfner and Springer will own about 98% of Axel Springer, with one of the founder’s grandchildren owning the remainder.
Media Controversies
The split will allow KKR and CPPIB to step away from the more controversial journalism division. The co-editor-in-chief of Bild was fired in 2021 after a New York Times report about an inappropriate relationship with a junior employee.
Business Insider drew the ire of billionaire Bill Ackman this year after it published stories alleging his wife, designer and former Massachusetts Institute of Technology professor Neri Oxman, had plagiarized parts of her doctoral dissertation. The article came in the wake of Ackman’s campaign against former Harvard University President Claudine Gay, who quit in January after she was accused of plagiarism in her own work.
Oxman’s lawyer had asked Döpfner and Axel Springer’s general counsel to correct the story and issue an apology, though BI stood by its reporting. Ackman accused BI of a “campaign to destroy” her reputation and threatened to sue the publication.
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