BERLIN: Germany’s Scout24 received a US$5.5 billion boost by two US private equity firms as it battles Axel Springer SE and eBay for dominance of Europe’s online classifieds market.
The sweetened 46 euro-a-share bid from Hellman & Friedman and Blackstone Group – which gives Scout24 an equity value of 4.9 billion euros – will help the company better challenge rivals and grow across Europe, Scout24 Chief Executive Officer Tobias Hartmann said.
The offer reflects a “joint long-term vision and ambition to turn Scout24 into a leading European digital player,” Hartmann said in a statement. Scout24 will look at potential acquisitions in its core markets following the deal, a spokesman said by phone.
Scout24 has in recent years successfully expanded from real estate listings in Germany into a platform for online classifieds in sectors ranging from finance to cars across Europe. A real estate boom in Germany and the acquisition of financial news site Finanzcheck also helped the company boost sales.
Yet Germany’s traditional real estate market is under threat. Chancellor Angela Merkel’s government is trying to rein in spiralling housing costs and is working on changes to realtor fees that could hurt Scout24’s business. eBay is offering free real estate listings on its German marketplace site eBay Kleinanzeigen, and if costs for sellers increase, the US giant may lure more listings away from sites like Scout24 and Immowelt, the rival owned by Axel Springer.
The changing market hasn’t deterred the US private equity firms, whose offer price represents the highest cash-flow multiple ever for a classifieds business, said Blake Kleinman, a partner at Hellman & Friedman.
“Things will be challenging in the short term because of the pending regulatory changes in real estate, but we have a long-term mindset and are convinced that Scout24, with its strong brand, is best positioned to adapt and help the industry and its customers manage these changes,” Kleinman said by phone.
Scout24 rose as much as 12.5% in early Frankfurt trading. The renewed offer is 11% higher than Thursday’s closing price. Scout24’s top executives last month rejected a previous bid of 43.50 euros a share.
The deal marks a return by Hellman & Friedman and Blackstone, who oversaw Scout24’s initial public offering in 2015. Rival buyout firms including EQT Partners, Silver Lake and KKR were also interested in bidding for the company, Bloomberg has reported, citing people close to the situation.
The deal is expected to close in the second half of May and is subject to a minimum acceptance threshold of 50% plus one share and clearance by antitrust authorities, Scout24 said.