Historic Split of Scandinavia’s Largest Media Group, Parent Retains Stake in Spinoff
The fast-growing online classifieds space gained a new player on Wednesday with Adevinta ASA (ADEB NO) hitting the European market following its distribution from Parent Schibsted ASA (SCHB NO). In a positive move to participate in the new company's growth prospects, SCHB plans to retain a ~60% stake in ADEB with the opportunity to monetize that stake later on. Meanwhile, both companies will benefit from industry veterans at the helm.The Edge View...
Schibsted Media Group ASA (SCHB) announced the separation of its international marketplaces business on September 18, 2018, which directly resulted in market euphoria and a share price surge of +14.3% in a single day (compared to the Oslo Bors Benchmark Index (OSEBX) index of +0.5% gain on the same day). We believe this highlights investors’ positive sentiments regarding the separation, and the combined company has sustained a share price increase of roughly +16% since the announcement to date compared to the OSEBX Index’s return of +2.2% in the same period. The separation took place on April 9, 2019 (after-market), and normal trading started on April 10, 2019. The separation took place with the 35% distribution of Adevinta ASA’s (ADEB NO) shares to SCHB (Combined) shareholders. SCHB also intends to sell an additional stake of 5% in ADEB in the open market, bringing its total post-Spin stake in ADEB to 60%.
The exuberance regarding ADEB’s prospects was reflected in its first day share price, which closed at NOK 89.09, +13% up from its opening price of NOK 78. ADEB’s current share price translates into an implied EV/EBITDA multiple of ~32.1x, compared to its close peers who are trading at an average EV/EBITDA ~14.4x. Additionally, the Spinoff’s share price momentum cascaded into SCHB’s (ex-Spin) own share value, which closed at NOK 226.60 (implying an EV/EBITDA multiple of 15.8x compared to its average Media and Classifieds peers of ~12x).
We believe the current prices for ADEB and SCHB (ex-Spin) are not justified, considering ADEB’s average peers’ EBITDA margin of >30% compared to the Spin’s margin of ~26% in FY18. For SCHB (ex-Spin), its media peers’ average margin is >20% compared to SCHB’s Media margin of 60% compared to SCHB’s (ex-spin) Marketplaces margin of
Schibsted is engaged in the media industry and has four segments: Online classifieds, which include the Norwegian online marketplace and operations outside Norway; Schibsted Norge media house, which includes the media houses VG, Aftenposten, Bergens Tidende, Stavanger Aftenblad and Faedrelandsvennen, printing and distribution operations, and the publishing house Schibsted Forlag; Schibsted Sverige media house, which includes media houses Aftonbladet and Svenska Dagbladet and a portfolio of internet-based growth companies; and Media Houses International, which includes of free newspapers 20 Minutes in Spain and France and Eesti Meedia Group comprising of operations in the Baltic States.
The Edge Group - Global Fundamental Catalyst Investing. The Edge provides investors with access to hidden corporate value from Global Special Situations using a pioneering approach to investments. Founded in 2005 by fund management and investment banking professionals to provide high quality, private equity-level research on Global Corporate Divestitures for the benefit of fundamental event-driven, growth and value-oriented investors in this difficult to track, but proven investment space.
The Edge will look to screen and analyze include Spinoffs; Reverse Morris Trusts; Squeeze Outs; Privatizations; Demutualization; Deep Discounted; Rights Issues; Rights Offering; Restructuring; Insider Purchases / Buying Change of Management / CEO Change; Deteriorating fundamentals; Post-Bankruptcy; Reorganization; Tender Offer; M&A Deals; Secondary Offering; Share Swap; Thrift Conversions; Share Buybacks; Activist; Mergers. All analyzed from a fundamental point of view.
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