scout24 sells its car division autoscout24 to the financial investor hellman& for 2.9 billion euro friedman. With this, activist investor elliott gets his way – and can hope for a lavish special dividend.
Now it happened very fast: the operator of online marketplaces, scout24, sells its car division autoscout24 for 2.9 billion euros to the financial investor hellman& friedman. In the process, the mdax company achieves a proud multiple on operating earnings before interest, taxes, depreciation and amortization (ebitda). According to Scout24, the valuation corresponded to 26 times the ebitda of autoscout24 from ordinary business activities in the past twelve months (until the end of september 2019).
High multiples are quite common in the internet business – especially as autoscout24 has high cash flows and an adjusted ebitda margin of 58 percent most recently. Nevertheless, the deal exceeds analysts’ expectations. The activist investor elliott, who holds a 7.5 percent stake in scout24 and had been pushing for the sale of the car division, had also previously only expected a purchase price of 2.5 billion euros.
Scout24 wants to focus on real estate trading
The transaction, which is expected to be completed in the first half of 2020, comprises the autoscout24, financescout24 and finanzcheck brands. The latter had only bought scout24 in the summer of 2018 for 285 million euros, which corresponded to eight times the revenue at the time.
From scout24’s point of view, the sale of the two financing portals only makes strategic sense together with autoscout24 due to their business model, as a scout24 spokesperson told FINANCE in response to an inquiry. The banks credit suisse and morgan stanley acted as financial advisors to the company.
the mdax group now intends to concentrate entirely on its second mainstay, the real estate brokerage platform immobilienscout24. In november, the management team led by CEO tobias hartmann unveiled a new strategy to build an ecosystem for buying, renting and commercial real estate in germany.
scout24 hardly benefits from sales proceeds
scout24 cfodirk schmelzer intends to use the proceeds of the autoscout24 sale for three things: first, the berlin-based company plans to distribute capital to its shareholders, which is in line with the explicit goal of activist elliott. The exact amount, structure and timing of such a transaction will be "decided and communicated in due course," scout24 said.
Secondly, an "acceleration of the share buyback program" is possible, as a spokesperson for the company told FINANCE. This is also likely to be in elliott’s interests. The activist already called for a "more ambitious" share buyback of scout24 in the summer. A program currently underway with a volume of 300 million euros.
Scout24 intends to use proceeds from sale to repay debt
In addition, the group intends to use a portion of the sale proceeds for the "repayment of loan liabilities" in order to comply with covenants of existing loan liabilities. The specific nature of the loan terms was not commented on.
Although scout24’s debt is within bounds: after the first nine months of the current year, the group’s net financial debt amounted to 751 million euros. according to the company, this was equivalent to 2.4 times the group’s ebitda from ordinary activities in the last twelve months.
However, the sale of autoscout24 means that a large part of the earnings will be lost. The division most recently accounted for around one third of the Group’s sales and ebitda. Without a repayment of debt, important financial ratios are therefore likely to come under pressure.
FINANCE heads
Dr. Dirk schmelzer, scout24 AG
After studying economics at the universities of cologne and copenhagen, dirk schmelzer worked as a research assistant from 1993 to 1997. in 1996, he spent a year as a visiting scholar at brown university in rhode island, u.s.a., on a scholarship from the german marshall fund. Following his promotion to dr. Rer.Pole. At the europe university in frankfurt/oder, he began his professional career in 1997 as a controller at the telefonica O2 in germany.
After holding various positions in the telefonica group, schmelzer becomes financial managing director of telefonica germany in munich and in 2009 financial managing director at hansenet in hamburg. In both functions, he is responsible for post-merger integration as well as for controlling, accounting and purchasing. From february 2011 to spring 2017, schmelzer is Chief Financial officer of internetholding holidaycheck (formerly tomorrow focus). In april 2017, he will move to prosiebensat.1, where he is CFO of the digital ventures& commerce will. Two years later, it is announced that schmelzer is leaving P7S1 again to take on new tasks. As of june 2019, he is the CFO of scout 24.
Scout24 dances to elliott’s tune
Scout24 had put autoscout24 on the market in august under pressure from activist investor elliott. The latter had complained that scout24 was "with great certainty" not the best owner for the car portal. munchener’s management board initially wanted to stick to the strategy it had only drawn up in july, but resistance to the activist’s brute methods did not last long at scout24.
Only two weeks later, management declared that it was examining "all alternatives" for the Group subsidiary: scout24 CEO hartmann held out the prospect of a partial IPO in addition to the sale of the division. At the end of september, the mdax company also appointed a CFO for the division in the person of britta schmidt in order to promote its independence.
Hellman& friedman makes do with scout24 division
Britta schmidt will now be working with the private equity firm hellman& friedman have to deal with. The financial investor is "a suitable new home for autoscout24," as the mdax company explains. Hellman& according to the "manager magazin", friedman is said to be fighting against competing financial investors such as permira, apax and carlyle on the one hand, and against strategists such as the australian online marketplace carsales on the other.Com and the berlin-based start-up auto1.
With the sale of the division to Hellman& friedman returns autoscout24 to old acquaintances: the financial investor took the group’s parent company scout24 public in 2015 and tried to take over the group again this spring, but failed with its offer of 5.7 billion euros or 46 per share. this morning, the share briefly traded at around 58.30 euros – the all-time high for scout24 shares. This corresponds to a market capitalization of almost 6.3 billion euros.
Manager changes, new funds, exciting investments: everything you need to know about the world of financial investors can be found on our FINANCE topic page on private equity. An overview of the most important transactions of the past weeks can be found on our M&A deals page.