(The author is a Reuters Breakingviews columnist. The opinions
expressed are his own.)
By Quentin Webb
LONDON, June 19 (Reuters Breakingviews) - EQT has had to
compromise to sell Springer Science+Business Media [SPSBM.UL].
The Swedish buyout firm is offloading the world’s second-largest
academic publisher to rival BC Partners [BCPRT.UL], for a
decent-looking 3.3 billion euros ($4.4 billion). But it has been
a slog. And the final structure implies an enduring gap on
The agreement came days after EQT and minority partner GIC
insisted they would focus “exclusively” on a Frankfurt listing
of the journal and book publisher. BC’s last-ditch, improved
offer was clearly enough to change their mind.
The offer has an enterprise value of 3.3 billion euros. That
equates to about 8.7 times the EBITDA Springer Science is likely
to make next year. Reed Elsevier (REL.L) ELSN.AS, an
Anglo-Dutch rival, trades at about 9.3 times 2014 EBITDA. The
modest discount is probably fair given Reed is bigger and more
Still, the outcome is far short of the 4 billion euros
originally touted as a maximum possible price. And about 150
million euros of the price will be performance-related, people
familiar with the matter say. These payouts will take years.
This arrangement is more common in fast-growth industries
such as biotech. It suggests BC was never fully convinced by the
sellers’ forecasts for the business. In addition, EQT and GIC
will retain a minority stake, which helps reduce BC’s equity
This is the latest of several “dual-track” deals where PE
owners have prepared both a sale and a flotation. That EQT
pulled back from a listing, despite the difficulties with a
sale, suggests it is cautious about markets. Perhaps recent
market jitters meant that informal soundings with prospective
investors were not promising. And selling out fully would take
years, during which EQT would remain exposed to the risk of
markets tanking or seizing up.
Despite the headaches, EQT and GIC have probably made a
decent turn, having bought this business for a bargain price a
little over three years ago. The exit underlines the fact that
there is an art, as well as a science, to selling companies.
SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS:
- BC Partners, the private equity firm, agreed to buy
Springer Science+Business Media from Swedish rival EQT for about
3.3 billion euros ($4.4 billion). The price includes a
“performance-related” payment, the two sides said on June 19.
They expect the deal to close in August.
- Springer’s owners had also prepared to float the company
in Frankfurt, and said on June 14 they would “focus exclusively”
on an initial public offering (IPO). However, BC then came back
with a revised bid at a “highly attractive valuation”, EQT said.
- EQT bought Springer Science in 2010. The private equity
arm of the Government of Singapore Investment Corporation, known
as GIC, also took a minority stake. Springer Science, which
publishes scientific journals and books, made 341 million euros
of EBITDA last year, on sales of 981 million. EQT and GIC will
keep minority stakes.
- EQT press release link.reuters.com/teh98t
- Reuters: BC Partners buys Springer Science for 3.3 bln
Annals of Initial Public Offerings [ID:nL5N0EI0YY]
- For previous columns by the author, Reuters customers can
click on [WEBB/]
(Editing by Robert Cole and Sarah Bailey)
Keywords: BREAKINGVIEWS BC/SPRINGER/
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