US private equity giant KKR wants to take the owner of Business Insider private in a deal that values the European publishing company at nearly $8 billion.
KKR (KKR) on Wednesday offered investors in Axel Springer €63 ($71.40) per share in a deal that has support from the company’s largest shareholder, Friede Springer, and CEO Mathias Döpfner.
The offer values the Berlin-based company at €6.8 billion ($7.7 billion). The price is a 12.5% premium over Tuesday’s close and an increase of nearly 40% from late May, when talks between the companies were first reported.
The publisher said Wednesday that it expects revenue for the current financial year to decline “in the low single-digit percentage range.” It also expects profit to fall.
Axel Springer said tougher economic conditions and the introduction of a digital tax in France forced the company to change its forecast.
Friede Springer, the widow of founder Axel Springer and owner of 42% of the company, said in a statement that partnering with KKR would allow for new investments.
“Our journalistic principles and our corporate culture remain the foundation on which we build and in which we trust,” she said. “KKR would be a good partner who sees this the same way.”
Döpfner, the CEO, said in a statement that going private will allow the publisher to shift its focus away from short-term financial targets. He plans new investments in people, products, technology and brands.
Berenberg analyst Sarah Simon said in a research note that going private could increase Axel Springer’s flexibility, especially if it seeks to acquire more classifieds businesses, such as parts of eBay. EBay said in March it is considering a spinoff of its classifieds business.
“We believe that management is taking the right approach: indeed, we believe that additional spending is crucial to the long-term future of the business,” Simon wrote.
Axel Springer also operates a 50-50 joint venture that publishes the European edition of Politico.
KKR is no stranger to media investments. In February, it bought Tele München Group, one of Germany’s largest television production companies.