Candover and Cinven to offload stake in German publisher

The two buyout firms are moving to ‘optimise the balance sheet’ of Springer Science and Business Media by selling a minority stake. Meanwhile another Candover portfolio company, DX Services, is in danger of breaching its debt covenants.

UK-based private equity firms Candover and Cinven have instructed investment banks Goldman Sachs and UBS to sell a stake in German publishing company Springer Science & Business Media.

The financial sponsors are not considering a sale of the entire company, but are reviewing approaches with a view to selling a minority stake, a source close to the situation has confirmed to PEO.

Springer was created in September 2003 when Cinven and Candover bought the publishing unit BertelsmannSpringer from Bertelsmann in a €1.05 billion transaction and merged the business with Kluwer Academic Publishers, a €600 million acquisition from Wolters Kluwer in January 2003.
In July 2005, the private equity firms received approximately €600 million from a refinancing of Springer Science & Business Media, returning their original equity investment but retaining their 90 percent stake.

In 2008 Springer, which employs more than 5,000 staff around the world, generated a turnover of €880 million. It publishes products covering science, technology, medicine, architecture and transport.

A report in UK newspaper the Financial Times said the sale could result in a €500 million equity injection into the business for a 49 percent stake, citing people familiar with the situation.

The rationale behind the currently proposed sale is an “optimisation of the balance sheet”, the source said, adding that it was too early to discuss the deal value.

Candover declined to comment, while Cinven was unavailable at press time.

At the same time Candover, which is currently in discussions to sell its listed vehicle as it struggles with a funding crisis, is experiencing difficulties with portfolio company DX Services, a private mail company it bought for £349 million in 2006.

The business is now in danger of breaching its debt covenants and is negotiating with bankers to get a covenant reset. As of December 21 2008, Candover valued its stake in DX at zero.

In February Candover walked away from its investment in luxury yacht-maker Ferretti, having entirely written off its 50.2 percent equity stake. It has also suspended investment of its 2008 buyout fund as it discusses with investors whether the fund has a future.