Schibsted acquires selected activities of Trader Classified Media

Schibsted ASA (SCH) , Published 07/06/2006 08:00:14

Schibsted ASA has, through its subsidiary Schibsted International Classified & Search AS, entered into a definitive agreement to acquire selected activities of Trader Classified Media (Trader) in Spain (including Latin America), France, Italy and Switzerland (Trader Western Europe[1]), for EUR 580 million in cash on a debt-free, cash-free basis.  The transaction is expected to close around mid-July 2006 and is subject to regulatory approval, Trader shareholder approval and other customary conditions. The largest shareholder in Trader, controlling more than 94% of the votes, has undertaken to vote in favor of the transaction.
Trader Western Europe in brief
Trader is a leader in classified advertising, focusing on the categories of vehicles, real estate, recruitment and general merchandise. The products are distributed on print and on the internet. The Company was founded in 1987 and is listed on Euronext (Paris Stock Exchange Eurolist). Trader Western Europe had revenues of EUR 186 million and operating profit (EBITDA) of EUR 40 million in 2005. In 2005, 51% of revenues came from Spain, 22% from France, 18% from Italy and Switzerland and 9% from Latin America. The online activities contributed to 22% of revenues and 41% of operating profit (EBITDA) in 2005. Year-on-year revenue growth in Q1 2006 was 10%, organic revenue growth was 9%, and EBITDA-margin was 20%.  Trader Western Europe had approximately 2,200 employees by the end of 2005.
Main positions acquired
After the acquisition, Schibsted will become a leading player within classifieds in Spain, France and Italy. The main titles that Schibsted acquires in Spain are the largest online recruitment brand and Segundamano, the most important brand within general merchandise distributed both on paper and on internet. In France Schibsted acquires among others La Centrale, a leading offline and online brand within vehicles and J’annonce, a leading offline and online general merchandise brand. Schibsted also acquires among others Secondamano in Italy, a strong brand within general merchandise. Schibsted estimates that the acquired internet sites have approximately 5.5 million unique visitors monthly.
Strategic rationale
The strong brands and market positions of Trader Western Europe form a unique platform for Schibsted’s ambitions to grow within classifieds. “Schibsted has a leading position within classifieds offline and online in Norway and Sweden. Our experience from successful classifieds like FINN and Blocket is our main competitive advantage when transforming Trader Western European assets into leading internet services in their markets”, says CEO Kjell Aamot. “The acquisition will result in a strong online position in Spain”, says EVP of Schibsted International, Sverre Munck. “ is the clear market leader within recruitment in Spain. In addition we see good opportunities for cooperation between our own classifieds in France and Spain and the internet services of Trader Western Europe.”
The synergies between Trader Western Europe and Schibsted’s 20 Minutes operations are mainly related to cooperation on the internet.
Impact on Schibsted
After the acquisition Schibsted becomes a leading pan-European player within classifieds. The Company will have approximately 7,500 employees and operations in 18 countries. In 2005, the combined Company would have pro forma revenues of NOK 11.3 billion and operating profit (EBITDA) of NOK 1.4 billion. As a consequence of the acquisition, online share of operating profit (EBITDA) increases from 18% to 23% in 2005. EBITDA margin increases from 11.4% to 12.7%. The revenue growth and operating margins of Schibsted are expected to be strengthened as a result of the acquisition. The acquisition is also expected to have a positive effect on EPS going forward. At closing, Schibsted’s pro forma equity ratio will stand at 23%. Over time, the equity ratio is expected to reach the Company target equity ratio of 35%. Net interest bearing debt is expected to be in accordance with the requirements in Schibsted’s loan agreements (net interest bearing debt/EBITDA of 3.0x).
The acquisition will be financed through a new loan facility from DnB NOR and Nordea.
Effect on Schibsted’s strategy
Trader Western Europe provides a strong platform for further international growth, particularly within classifieds. The acquisition will lead to reduced spending on organic growth. The estimate of NOK 300-400 million in negative EBITDA from organic growth in 2006 is maintained, but fewer new projects especially within classifieds international will lead to lower spending on organic growth in 2007. General business development in Scandinavia will not be affected by the acquisition. Schibsted’s focus on editorial products will be as strong as ever, the acquired assets are a good starting point for development of new editorial concepts.
Schibsted in brief
Schibsted is the largest media group in Norway and among the largest media groups in Scandinavia. The group has established products and rights within newspapers, TV, film, publishing, internet and mobile services. The main part of the business is concentrated in Norway and Sweden, but the group currently has operations in nine other European countries; Spain, France, Denmark, Finland, Estonia, Latvia, Lithuania, Austria and Russia. Schibsted had revenues of NOK 9.8 billion and operating profit (EBITDA) of NOK 1.1 billion in 2005. By the end of 2005 Schibsted had 5,360 employees. The Company has been listed at the Oslo Stock Exchange since 1992.
JP Morgan acted as exclusive financial advisor to Schibsted.
Information regarding the acquisition
A press conference will be held at Schibsted’s premises in Apotekergaten 10, Oslo today Wednesday the 7th of June at 10.00 CET. A short web cast in English will be available at at 10.00 CET.
A telephone conference will be held at 11.30 CET on telephone number +47 21 53 06 00.
Enclosed are pro forma financial statements and historical financial statements for Trader Western Europe. The material that will be presented during the press conference is also enclosed. Trader Western Europe is expected to be consolidated into Schibsted’s accounts from Q3 2006. Comparable figures per quarter will be released on before the release of the Q3 figures.
Contact persons:
CEO Kjell Aamot, tel. +47 23 10 66 90.
CFO Trond Berger, tel. +47 91 68 66 95.
EVP Schibsted International Sverre Munck, tel. +47 91 68 66 99.
Oslo, June 7th 2006
Astrid Thommesen Sæbø
Investor Relations

[1] Includes 84% of Spanish company Anuntis Segundamano Holding which in turn owns 60% of Infojobs. As part of the acquisition Schibsted will have the option to buy out minorities in Infojobs (40%) capped at EUR 25 million. There are also put and call options in place in relation to the 16% minority stake in Anuntis Segundamano.
Presentation – press conference:

The Financial statements can be downloaded from the following link: