PE groups to acquire Scout24 in $6.4bn deal

April 2019 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

April 2019 Issue

Private equity firms Hellman & Friedman and Blackstone have agreed to acquire German digital marketplace company Scout24 in deal worth $6.4bn, including debt.

The deal, which will be the largest ever buyout of a German company by the private equity industry, is subject to a minimum acceptance threshold of 50 percent plus one share, as well as customary closing conditions and merger control review. The acquisition of Scout24 is being made through holding company Pulver Bidco, which is jointly controlled by funds advised by Hellman & Friedman and affiliates of Blackstone, and is expected to close in late May.

Scout24 accepted a revised €46 a share offer from the two US private equity firms after rejecting a €43.50 per share offer in January. The revised offer represents a 27.4 percent premium to the unaffected share price of €36.10 on 13 December 2018 and a 24.4 percent premium to the company’s unaffected three month volume weighted average share price of €37. The offer values Munich-based Scout24 at almost 18 times 2019 earnings before interest, taxes, depreciation and amortisation (EBITDA).

“We believe this is an attractive offer with a substantial premium, high transaction certainty and a strategic value-add for the company,” said Hans-Holger Albrecht, chairman of Scout24.

“Hellman & Friedman and Blackstone are known to Scout24 as trusted and long-term partners given their prior ownership and familiarity with the company,” said Tobias Hartmann, chief executive of Scout24. “The terms of the offer represent an attractive opportunity for a highly strategic partnership that recognises the quality of the Scout24 platform, its employees, customers and partners. I am delighted about our joint long-term vision and ambition to turn Scout24 into a leading European digital player.”

Scout24 was previously owned by Hellman & Friedman, which acquired a controlling stake from Deutsche Telekom in 2013 for €1.5bn before listing the business in 2015, valuing it at €3.2bn. KKR sold a 50 percent stake in the business to private insurance group Swiss Mobiliar in 2016.

Hellman & Friedman and Blackstone are believed to have defeated rival PE firms including EQT Partners, Silver Lake and KKR & Co to secure Scout24. The firms decided to pursue a deal for Scout24 after the company’s stock price collapsed last year in the wake of a government proposal to alter the economics of the real estate market. Under new proposals, vendors will likely having to pay estate agents’ fees instead of transferring them to buyers.

The deal for Scout24 comes as the PE industry looks to invest some of the mountains of dry powder which have accumulated in the space. For many firms, returning to companies or industries in which they have prior knowledge and experience is a particularly attractive proposition. PE firms including CVC Capital Partners, Apollo Global Management and Bain Capital have all done so in recent months.

Latham & Watkins is advising Hellman & Friedman and Blackstone on M&A, debt and equity finance matters, with a team led by London private equity partners David Walker and Huw Thomas and Düsseldorf corporate partners Niko Paschos and Tobias Larisch. “What we’re seeing is the function of a very competitive market with funds being attracted to businesses that they already know well,” said Mr Walker. “We’re seeing more deals to take listed companies private because there are not so many large, high-quality, secondary buyout assets on the market.”

The deal is unusual for a leveraged buyout as there is very little borrowed money involved. The firms are supplying the majority of the cash and will not be buying out all of the Scout24 shareholders.

Richard Summerfield