BC Partners to acquire Springer Science

August 2013 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

Private equity firm BC Partners Limited announced in late June that it had agreed to buy German academic publisher Springer Science and Business Media GmbH for $4.4bn.

The transaction is subject to the customary regulatory approvals and, once completed, will represent the second largest German acquisition of 2013, as well as the sixth biggest private equity transaction globally. The deal will also be the largest takeover of a German company by a private equity group since the £4bn acquisition of forklift truck maker Kion Group AG by KKR & Co and Goldman Sachs in 2006.

Londonbased BC Partners is acquiring the company from EQT Partners AB and the sovereign wealth fund Government of Singapore Investment Corp (GIC). However, under the terms of the deal EQT and GIC will retain a minority stake in the business, in an effort to promote continuity and stability.

The agreement marks the end of months of negotiations over the sale of Springer. Discussions seemed to have broken down in mid-June when it appeared BC Partners was unwilling to match the asking price of the company. In light of these faltering negotiations, Springer’s owners also pursued a dual track exit from the company. Having been advised on an initial public offering (IPO) by Freshfields Bruckhaus Deringer and Hengeler Mueller, EQT and GIC had strongly leaned toward floating the company. However, BC Partners returned with a revised offer, which, according to Marcus Brennecke, a partner at EQT Partners, was a “highly attractive valuation” of the company.

Springer Science, headquartered in Berlin, employs around 7000 people across sites in 22 different countries. The company produces around 2200 magazines and 7000 books annually on subjects including science and medicine. Springer reported revenues of £981m in 2012, up 6.4 percent on 2010, and EBITDA of £341m, a 12 percent increase.

In a joint statement announcing the deal Ewald Walgenbach, a managing partner at BC Partners, said “Springer Science and Business Media is a well-established company in a growing sector and has excellent future prospects. The company has been one of the most innovative in its field in terms of developing new ways to distribute and access high quality publications. Its international footprint offers attractive opportunities and it is positioned to benefit from the growth of the knowledge economy worldwide. We look forward to partnering with management to support the company’s growth plans over the coming years.”

BC Partners also noted it intends to help Springer continue to grow globally by further expanding the company’s “core subscription business as well as focusing on traditionally high-growth areas such as open access publishing and emerging markets”.

Regarding the sale, Derk Haank, chief executive of Springer Science, commented “We share a vision with BC Partners for the future of Springer and believe the new investment will add significant value to our business and its continued growth prospects. My colleagues on Springer’s management team and I are looking forward to working closely with our new partners to combine our expertise to facilitate continued growth over the years ahead.”

In 2009, in a deal valued at £2.3bn, EQT acquired an 82 percent stake in Springer from British private equity firms Candover Investments Ltd and Cinven. GIC also took an 18 percent minority stake in the company. Candover and Cinven created Springer Science in 2004 when they merged Dutch group Kluwer Academic Publishers with German firm BertelsmannSpringer. In order to fund their takeover, EQT and GIC arranged a £1bn debt package which was underwritten by Goldman Sachs International, Unicredit, Barclays Capital and Deutsche Bank.

Richard Summerfield