Just as Axel Springer completes its $75m deal to acquire a majority share of the Morning Brew newsletter as part of its growing Business Insider, the German media group is planning an embarrassing retreat from a major sector of the classifieds market in France. It is putting its CarBoat Media up for sale with an expected price tag of some €400m.
Its primary brand is La Centrale for used cars. Axel Springer has long promoted the company’s success in France where most used cars are bought and sold privately rather than by businesses, as elsewhere in Europe and the US.
CarBoat Media had 2019 revenue of €64m and a 47% EBITDA margin. Notably, revenue has increased by only 16% in the four years since it became a wholly-owned Springer subsidiary in 2016 – although the profit margin had been pushed up from 40%. Axel Springer first acquired a majority stake in Car&Boat Media for €72m back in 2014. At the time, it was valued at €142m.
Would-be buyers for CarBoat Media are said to include the equity companies Providence, and Hellman & Friedman (owner of AutoScout24). But there has been some confusion about why Axel Springer – which generates some 39% of its revenue and 70% of its EBITDA from digital classifieds – would want to divest a significant part of its classifieds business.
It has now become clear that La Centrale’s has been struggling with fierce competition from LeBonCoin, now the dominant auto classifieds in France.
That disclosure came from Adevinta (a spin-out from Schibsted) which reported a solid set of results for the third quarter of 2020. It said the highlight was its operation in France where revenue had increased by 17%. And LeBonCoin was the standout performance.
Adevinta CEO Rolv Erik Ryssdal was reported by the AIM group as saying that Covid had changed the ‘game’ and that cost control was now more important than ever.
Meanwhile, Axel Springer (which became a private company agains this year, with KKR as a large minority shareholder) continues to develop a strategy which – it is believed – may include the eventual de-merger of the classifieds. Perhaps that would come before or after a major classified acquisition?
In 2019, Axel Springer had revenue/ EBITDA of €3.1bn/ €630.6m slightly down on the previous year.
