Axel Springer to Limit Acquisitions to Midsize Targets, Online Operators

Axel Springer AG (SPR), the publisher of Germany’s most popular newspaper, will restrict itself to “unspectacular” medium-sized acquisitions to expand without piling up debt, Chief Executive Officer Mathias Doepfner said.

“Just because we’re in an extraordinarily solid position financially, with barely any debt and unused credit lines, doesn’t mean we’re tempted to spend,” Doepfner said today at the annual shareholders meeting. “We’ll keep things in check and continue step by step to make unspectacular medium-sized investments, in line with our strategic priorities of transforming the company in a digital world.”

Axel Springer, which owns Germany’s top-selling Bild newspaper, and competitors such as News Corp. (NWSA) and Time Warner Inc. are scrambling to follow readers online to win advertising revenue or to persuade customers to pay for content that was previously free. Berlin-based Axel Springer’s strategy is to make money on content, advertising and classifieds, and it wants digital sales to make up half of group revenue in seven years, the CEO said today.

The Germany company bid for French property-classifieds portal SeLoger.com last year and is completing the takeover after gaining 98.7 percent control as of March 23. Axel Springer paid 633 million euros ($913 million) for SeLoger, Chief Financial Officer Lothar Lanz said at the meeting in Berlin.

Online marketing, content and classifieds contributed 24 percent of Axel Springer’s sales last year, up from 21 percent in 2009 and 2.1 percent in 2004, Doepfner said.

Website Acquisitions ‘Priority’

“Online is clearly the priority” for any purchases, the CEO said. “But we won’t rule out bolt-on print acquisitions in a regional market or in a particular market segment if an interesting opportunity presents itself. Most important is that we exercise price discipline.”

Axel Springer had net liquidity of 79.6 million euros at the end of 2010 compared with net debt of 193 million euros a year earlier, according to its annual report. The company has a secured credit line of 1.5 billion euros maturing in 2012, of which 1 billion euros has been extended until 2013.

With the purchase of SeLoger, Axel Springer is hoping to strengthen its position in the property-classifieds segment, Doepfner said. The group’s equivalent to SeLoger in Germany is Immonet.de, the second largest online real-estate player in the country after Deutsche Telekom AG (DTE)’s Scout group.

“The idea is to add eastern and western European markets and that it can positively impact Immonet,” Doepfner said.

Investors today approved a record dividend of 4.80 euros a share for 2010, up from 4.40 euros a year ago, as well as a three-for-one split in its stock, intended to increase liquidity and draw more investors. Shares in the company are 52 percent owned by the Axel Springer Gesellschaft fuer Publizistik and 7 percent by Friede Springer, according to Bloomberg data.

To contact the reporter on this story: Ragnhild Kjetland in Berlin at rkjetland@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong in Berlin at kwong11@bloomberg.net

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