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Deutsche Telekom reportedly nearing sale of Scout24

November 20
10:31 AM 2013

According to three sources who were familiar with the sale proceedings, Deutsche Telekom AG was close to securing an agreement to sell its 70% ownership stake in its digital-classifieds business Scout24 Holding. The business, added the sources, would be sold to Hellman & Friedman LLC. The people, who refused to be named as the decision was not yet been made public, said the sale of the business would put Scout24 Holding at EUR2 billion or USD2.7 billion, which includes debt.

Scout24 is the largest real-estate and dating portal in Germany. The platform provides classified ad services online for travel, jobs and cars. It boasts of a 14 million monthly user base and operates in 22 countries. Bloomberg said in its report that Deutsche Telekom had been seeking for a partner this year to aid the former in expanding the business. Deutsche Telekom was aiming to generate cash to fund its strategic acquisitions in mobile-phone and landline networks located in Europe.

When asked for a comment regarding the report, Deutsche Telekom spokesman Andres Fuchs refused to provide comment regarding the auction. San Francisco-based Hellman & Friedman representative Charlotte McMullen, who is based in London, also did not provide any comment.

A possible reason why Deutsche Telekom decided to divest its online classifieds platform was the decline of the profitability of the phone company's digital business division. Last year, Scout24's earnings before interest, taxes, depreciation and amortization was EUR137 million, which is 16% of the divisions' revenue which is EUR868 million. This was a significant 20% margin decrease from 2011's revenue.

According to Bloomberg, phone companies in Europe had been looking to divest its content and Internet businesses to secure much-needed cash to upgrade to high-speed mobile networks. Last year, Telefonica SA (TEF) of Spain divested its interest in Rumbo, an online travel agency. Just this month, Telecom Italia SpA had put up for sake its TI Media Broadcasting unit.

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