Scout24 to explore sale or spin-off of autos platform

FAN Editor
The headquarters of Scout24 is pictured in Munich
The headquarters of Scout24, an operator of digital marketplaces for real estate and automobiles, is pictured in Munich, Germany July 5, 2019. REUTERS/Michael Dalder

August 13, 2019

By Alexander Hübner and Douglas Busvine

MUNICH (Reuters) – German classified listings group Scout24 <G24n.DE> said on Tuesday it would explore a sale or spin-off of its autos platform after facing calls from activist investor Elliott to sell the business.

The strategic review marks a concession to Elliott’s demand to carve out and sell AutoScout24, which sources close to the U.S. investment fund say could fetch up to 2.5 billion euros ($2.8 billion).

“We can consider a range of options for AutoScout24 and will examine these with an open mind. These could include a sale or spin-off,” Hartmann told Reuters at Scout24’s headquarters in suburban Munich.

Elliott, in a letter published last week, also urged Scout24 to expand a proposed 300 million euro buyback of stock, saying its share price could top 65 euros if management acts decisively to boost returns to shareholders.

Shares traded steady at 52.30 euros on Tuesday, up 14% in the year to date and valuing the business at 5.6 billion euros.

Hartmann played down talk of tensions with investors calling for faster change at Scout24, which runs Germany’s leading property portal and whose autos operation is present in Germany, Italy, the Netherlands, Belgium and Austria.

“Our ideas and those of our investors are not that far apart,” he said in an interview.

He pointed to strong operational performance, with group revenues gaining by 20% in the first half, as Scout24 on Tuesday confirmed guidance for revenues to expand by 15%-17% this year, with core profit margins at 52%-54%.

Hartmann said an overhaul announced on July 19, to structure Scout24’s property and autos operations as two separate verticals, could expand group operating margins by 200 to 300 basis points by 2021.


AutoScout24 is the smaller and faster-growing of Scout24’s properties, billing itself as the top automotive marketplace in the European Union. German property site ImmobilienScout24 is, by contrast, more mature and profitable.

Sources close to Elliott reckon that ImmobilienScout24 would be worth 5 billion euros as a standalone business – almost as much as Scout24 is valued at on the stock market today.

The classifieds group has been left facing uncertainty after a takeover bid, at 46 euros per share, by Hellman & Friedman and Blackstone failed earlier this year, despite management’s recommendation that shareholders accept the offer.

That bid attracted the attention of activists including Elliott, which has disclosed a stake of more than 7%, and London-based Pelham Capital which has built a slightly larger position.

Scout24 management is looking into whether it can increase the company’s current leverage ratio of around three times to finance a larger share buyback, Hartmann said.

($1 = 0.8933 euros)

(Reporting by Douglas Busvine; Editing by Michelle Martin)

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