Key to digitization –M&A and asset developmentCapital Markets Day – Berlin, December 11, 2012
Dr Jens Müffelmann, Head of Electronic Media
Oliver Schäffer, Head of M&A / Strategy
2
“With regard to electronic media, Springer is completely underdeveloped ”
“... the chaotic web-sandbox of Springer...”
“Europe‘s largest press conglomerate – a mere internet midget . At least they have a strategy now“
Axel Springer about a decade ago
May 1999 May 2000 October 2000
2 Dec. 11, 2012 Key to digitization – M&A and asset development
Source: comScore top 100 properties, October 2012
Digital reach in Europe today
European media peers unique visitors in million
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17.1
22.5
23.0
24.2
27.5
30.7
35.7
46.5
80.8
Digital Media: top-line / bottom -line
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201120102009200820072006
Revenues in €m
9M/2012
EBITDA in €m
201120102009200820072006 9M/2012
8231669M/12
9M/12
Consolidated figures, 2006-2011 based on Annual Reports, 2012 based on Q3 Report
Attack since 2006
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By acquisition 67Organic 90Divestments 8ΣΣΣΣ 149
By acquisition
Organic
2006 2007 2008 20102009 2011 2012
Strategic fit: where we can provide leverage
Proven and scalable business models
Clear path to profitability / profitable businesses
Experienced management / commitment
Reasonable valuation
Clear investment criteria
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Dec. 11, 2012 Key to digitization – M&A and asset development7
M&A digital majority acquisitions 2006-2011
7
Valuationfor 100%
EV/EBITDA
In €m
EBITDA 2011 (100%)
Purchase price
~1,550 ~200~1,250
~8×
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2006-2011: selling non-strategic assets, buying digital growth businesses
8
Purchase price
EBITDA effect
~1,250 €m
~200 €m
~1,000 €m
<50 €m
EBITDA effect acquisitions: EBITDA 2011 (100%), EBITDA effect divestments: EBITDA in last full fiscal year under AS ownership
Digital growth businesses
Non-strategicassets
Dec. 11, 2012 Key to digitization – M&A and asset development9
M&A activities 2012
9
Acquisitions Disposals
In €m
Other
Total
(75%) 215.0
(100%)
(100%)
(80%)
132.0
~50.0
127.5
~5.0
Axel Springer Digital Classifieds
Other
Total
(30%) 237.0
~15.0
Net invest: ~280~530 ~250
Ø 2012eEV/EBITDA
~11×
Price discipline at acquisition of growth companies Digital majority acquisitions 2006 - 2011
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At acquisition date: including sale of StepStone Solutions as negative purchase price; 2012e: benchmark: EV/EBITDA 2012e of European internet stocks currently at 11.4x (Source: UBS Internet Sector Update as of October 22, 2012)
EBITDA-Multiplepro rata
12×Bought at
fair valuation
At acquisition date
Leverage through performance
8×2011
Further positive development
<
2012e
7×
Our principles as digital shareholder
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Source picture: INTERTOPICS
No cultural clash
No colonial masters
Retaining founders / management
Realistic view on synergy potential
Maintaining growth momentum
Operational independency of management
Slim holding structure
Situational “short leash” / “long leash” management
Market position in acquisition year
2009:
2007:
(DE)
2009:
2006:
(UK)
(Europe)
(DE) #5
#2
#3
#2(DE) 2010: #3
Pushing for market leadership
Market position 2012
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Financial web applications
Finance portal
Infotainment portalWomen portal
Soccer community
Car and motor community
Affiliate marketing
Online prospectus / coupons
Affiliate marketing UK
Portfolio of market leaders
Real-estate marketplace
Price comparison
Job board
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Creating synergies through our network
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EXAMPLES
With Axel Springer
Among the assets
Corporate servicesDiscounted media campaigns Shared content and traffic
…
Jobs classifieds integration
Real-estate classifieds integration
Cross-integration of services
Prospectus integration
Real-estate classifieds integration
Performance marketing
Financial IT Systems
Legal, tax, M&A Marketing
Procurement HR
… ……
Networking and knowledge-sharing events
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Working Lunch Session “Facebook optimization”
Social Media Club & SEO workshop
Digital CTO Workshop
Digital CFO Event
Online Marketing Camp
Media Entrepreneurs initiative
Brown Bag Sessions
Hy Berlin
Silicon Curry
EXAMPLES
Digital CEO Summit
Digital Cup Volleyball …
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Strong post-acquisition development 2006-2012
16
+15%MarketCAGR since 2006
Revenues Ø CAGR since acquisition date +29%
+48%EBITDA Ø CAGR since acquisition date
Top 10 digital acquisitions 2006-2011, based on revenues
Market growth: Weighted market CAGR 2006-2012 based on ZenithOptimedia, PwC and HDE
Dec. 11, 2012 Key to digitization – M&A and asset development17
Case study: building global classifieds
17
Joining forces
Settingthe ground
Leveraging
Phase 1 Phase 2 Phase 3
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Phase 1: setting the ground around three core investments
18
2001 100% in PropertyGate
2002 association IVD (former RDM) acquired 25.1% stake; foundation/change of name to Immonet GmbH
2003 combining of sites www.rdm-immonet.de and propertygate.com to immonet.de
2006 100% in Immonet GmbH
2004 49.9% in StepStone Deutschland AG
2008 acquired in a first step 15% in StepStone ASA and increased its stake to 33.3%
2009 extended majority stake in StepStone ASA from 52.7% to 87.8%; mandatory offer to all remaining shareholders and squeeze-out / delisting
2010 sale of StepStone “Solutions” business unit
2010 acquired 12.4% stake in Seloger.com SA and launch of public tender offer
2011 successful completion of public takeover during re-opened offer; increased stake from 74.2 % to 98.7% and squeeze-out/delisting
2011 100% acquisition of Jobanova2010 majority acquisition
Umzugsauktion.de
2011 acquired 9.4% stake in iProperty.com and increased stake to 16.1%
2007 100% acquisition of Wohnfinder.de
2011 100% acquisition of a-Gites
Revenues and EBITDA 2011: consolidated figures
16Transactions
~800 €mTotal invest
~222 €mRevenues 2011
~68 €mEBITDA 2011
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30% 70%
Axel Springer Digital Classifieds GmbH
Phase 2: joining forces with General Atlantic
Axel Springerinvestments
General Atlanticdeal
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GA-Partnership shows significant value step-up in underlying assets
20
1,250 €mEnterprise value
460 €mEmbedded loan
790 €mEquity value
~800 €mPurchase prices and investments
~50 €mUtilized tax effects
~640 €mNet investment
~110 €mSale of StepStone “Solutions” business unit
+ ~100%
11.3%
Phase 3: leveraging and executing
30% 70%
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Axel Springer Digital Classifieds GmbH
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3 quarters – 3 countries – 3 market leaders
22
November 2012October 2012April 2012
Largest real-estate portalLargest online recruitment portal
Largest regional content and classifieds portal
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Classifieds: top-line / bottom -line
23
9M EBITDA margins
14% 35% 43%
Revenues in €m EBITDA in €m
9M/2012
9M/2012
20112010 20112010
9M/12
9M/12
235
102
Consolidated figures for Axel Springer Digital Classifieds
Digitization: Looking ahead
9M/2012 Our Vision2004
Print Print Print 50%35%2%Digital
DigitalDigital
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Pro forma for acquisitions (consolidated view: 34%)