Mathias Döpfner and KKR Nearing Deal to Split Axel Springer in Billion-Dollar Restructuring

German billionaire Mathias Döpfner and investment firm KKR & Co. are reportedly close to finalizing a deal that would break up the media conglomerate Axel Springer into two distinct entities, separating its fast-growing classifieds unit from its news operations. According to sources familiar with the negotiations, the split could be announced as early as this week, with the potential to value the entire company at around €13.5 billion ($15 billion), including more than €10 billion for the classifieds segment.

The talks, which have been ongoing for months, are still in the final stages, and there’s a chance the deal could be delayed or even fall apart. However, if successful, KKR would gain control of the classifieds division, which has been a major growth driver for Springer. Meanwhile, the politically sensitive news division would remain with Döpfner, Axel Springer’s CEO, marking a strategic shift in the partnership between Döpfner, Friede Springer (the widow of the company’s founder), and KKR, who had teamed up to take the company private in 2019.

Axel Springer, known for its aggressive expansion into digital media over the past decade, has become a global player in online journalism, particularly in the U.S., where it acquired Politico and Business Insider. The company also struck a high-profile deal with OpenAI, allowing the AI firm to use Springer’s news content for generative AI applications.

If the split goes through, it would allow KKR to focus on the faster-growing, less politically charged classifieds business, while Döpfner could turn his attention to steering Axel Springer’s media properties through an increasingly competitive and politically complex global landscape.

The decision to split Axel Springer, one of Europe’s largest media companies, stems from several strategic and financial motivations. By splitting into two entities, Axel Springer can allow each division to focus more intently on its specific operations. The classifieds unit, for example, could concentrate on expanding its digital platforms and growth strategies without being tied to the slower-growing and more politically sensitive media business. Meanwhile, the news division could sharpen its focus on journalism and content generation without being overshadowed by the faster-growth classifieds side.

Axel Springer’s classifieds business has experienced substantial growth and is considered a “very strong driver” of the company’s revenue. Separating this faster-growing, high-margin segment from the media division could help each part of the company be valued more accurately. The classifieds unit alone is valued at over €10 billion ($11 billion), making it more attractive to investors as a standalone business.

With KKR in the mix as they are a major private equity player, likely sees more value in controlling the high-growth classifieds business, which offers fewer regulatory and political complications compared to media. This division allows KKR to step away from the more volatile, less predictable media sector, while focusing on the profitable classifieds business.

Axel Springer’s media operations, which include Politico and Business Insider, have increasingly found themselves in politically sensitive territories, particularly in the U.S. where media scrutiny is high. By separating this from the classifieds arm, which faces fewer regulatory challenges, the split reduces the potential for political friction affecting the overall company’s performance.

Lastly, breaking up Axel Springer would also allow both the media and classifieds arms to pursue mergers, acquisitions, and partnerships independently. This flexibility can enable each segment to respond better to its specific market conditions and seize growth opportunities that might have been hindered by the broader conglomerate structure.

The split allows Axel Springer to unlock the value of its fastest-growing assets while focusing its media side on its core business, a move that reflects broader trends in media and tech consolidation.

Gerald Foster
Financial Desk