Scout24 back on PE radar as tech rout provides fresh opportunity

A number of buyout groups have revived interest in a possible bid for the Germany-based, publicly listed real estate marketplace, according to the sources. This comes almost three years after Blackstone and Hellman & Friedman (H&F) failed in a EUR 5.7bn attempt to take the company private.

However, those that have Scout24 on the radar do not appear to be prepared to “jump” at this time, one of the sources cautioned. Despite Scout24’s depressed valuation, its share price needs another three-to-six-month period of sustained trading to entice an offer from any private equity firm, another two sources said.

Apax Partners and Cinven Partners, as well as H&F and Blackstone, would be among a pool of financial sponsors expected to express interest in a deal, two of the sources said. H&F knows Scout24 well, having previously owned the group before listing it in 2015, one of them said.

After its failed joint bid for the whole of Scout24 in 2019, H&F acquired the group’s AutoScout division later the same year for GBP 2.45bn, representing a 29.8x EV/EBITDA multiple, according to Mergermarket data. Following the sale of its auto marketplace, Scout24 became solely focussed on its digital marketplace for residential and commercial real estate.

Interest in Scout24 is understood to be driven by the company’s share price, which has underperformed in recent months as investors shun technology stocks in favour of safe-haven assets, according to the sources.

Shares in the Munich-headquartered group have fallen by almost a third over the past six months and closed Monday (28 February) at EUR 52.50. Rightmove’s [LON:RMV] stock price is down just 4% over the same period.

Scout24 is trading at 18x forecast FY22 EV/EBITDA while UK-based peer Rightmove is at 23x, according to data provided by Fidessa and compiled by FactSet.

Ongoing changes to Scout24’s business model could be another contributing factor to its share price decline, one of the sources said. The company’s ratio of own-work-capitalised to sales widened to 7.4% in 3Q21 from 5.9% quarter-on-quarter as part of product development plans that have seen investment in property platform Vermietet.de, which it acquired last May.

Old flame
Speculation about a deal involving Scout24 has persisted since the EUR 43.50 per share offer from Blackstone and H&F failed in May 2019, one of the sources said. While that offer failed to reach the minimum shareholder acceptance threshold, certain parties could identify an opportunity in the current market backdrop to attempt another bid, he added.

Should Scout24 continue to trade at depressed levels, prospective bidders could justify offering a premium of around 20-30%, one of the sources said. Still, shareholders could view the hit to Scout24’s stock price as a “short-term blip” and therefore demand a premium of around 50%-60%, a sector advisor said. A second advisor agreed that the company’s valuation remains a key sticking point for any private equity firm looking to make an offer.

German financial regulator BaFin requires that any takeover bid for a German listed company be at least equal to the target’s volume-weighted average price (VWAP) in the three months before an offer is made.

A limited number of large take-privates are on the horizon in Germany this year, with ongoing pitches and discussions with investors taking place on the back of significant transactions last year, one of the sources said. Last year’s key deals include EQT and H&F’s joint EUR 3.7bn deal for online pet food retailer Zooplus, and Carlyle’s take private of rail infrastructure tech provider Schaltbau.

Scout24 announced a 10% increase in revenues to EUR 389m, and a 5% increase in EBITDA to EUR 222.8m, for the 2021 full year. It reported an operating EBITDA margin of 57.3%, within its guidance range of 57%-58%. The company also announced an additional EUR 350m share buyback programme.

Shares in Scout24 this afternoon were trading up 4.25% at EUR 54.42, giving it a market capitalisation of EUR 4.55bn.

Scout24, Blackstone, Apax, Cinven and Hellman and Friedman declined to comment.

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• Topics
• Buyouts
• Technology
• Real estate
• DACH
• Blackstone Group
• Cinven
• Take Private
• Apax Partners
• Germany
• Hellman & Friedman LLC