David Worlock | Developing digital strategies for the information marketplace | Supporting the migration of information providers and content players into the networked services world of the future.
" ... I have put 'merger' in inverted commas because you could also describe this as a German dynastic marriage, or indeed you could describe it as an acquisition, since the architect of the deal, Stefan von Holtzbrinck, ends up holding 53% of the equity. Holtzbrinck, of course, remains a family company and started as a major player in German national and regional newspapers. Like another family company, DMGT, this generation has seen the instability of basing the family wealth solely in newsprint. DMGT, through diversification supported and encouraged by Vere and then Jonathan Harmsworth, is now a B2B company with a minority proportion of its activity in newspapers. The Von Holtzbrinck route was different, but ends in the same place: the minority of its interests are now in scientific information, academic publishing and education. The critical threat that the demise of newspapers would sink the family ship is now over. And over in a very clever way. Keep 'merger' in quotes. While Macmillan always had to get bigger to become a rival to Wiley in a market dominated by Elsevier, Springer always had to sell. It has had so many suitors over the years that it qualified for a place on Parship, the Holtzbrinck dating site. The current relationship with BC Partners is a tertiary private equity deal, something unheard of before this century. But the result of Cinven and Candover buying the decaying hulk of Springer from Bertelsmann was a clean-up, followed by a sale to EQT and GIC. Which was followed by more streamlining and margin improvement and a sale to BC Partners for 3.3 billion euros. There could have been little improvement to be made this time round. Springer had recreated its Springerlink online platform and the company is undoubtedly back amongst the market leaders in terms of profitability, so the only way to go was a trade sale. The solution in this deal is just that, staged to the benefit of both parties. BC get to exit their 47%, possibly via an IPO, in the next three years, at an enhanced valuation secured through the Macmillan assets, and especially Nature Publishing. Holtzbrinck get a satisfying revaluation of their Macmillan purchase when the IPO goes through, and probably an opportunity to grow their stake. So both can go happily hand in hand to the German regulator, and get a big tick for accomplishing one of the prized national objectives – keeping Springer, the historical home of German chemistry as it reshaped late nineteenth century science, as a German company. Finally, as you look at this deal, do the maths. Holtzbrinck have merged into this deal their assets at Macmillan to form a company worth 5 billion euros. Their partner put in a company worth 3.3 billion euros two years ago. Holtzbrinck get 53%, depending on how much debt is left in 2-4 years time , and how much of this the partners decide to turn into equity. Sounds good to me! ..."