Sanoma Corporation, Stock exchange release, 20 April 2020 at 16:00 EET
Sanoma completes the divestment of Sanoma Media Netherlands
Sanoma has today completed the divestment of Sanoma Media Netherlands to DPG Media. The divestment was announced on 10 December 2019 and it was subject to customary closing conditions, including the approval of Dutch competition authorities, which was announced on 10 April 2020.
“The closing of the divestment of Sanoma Media Netherlands to DPG Media is a significant step in Sanoma’s strategic transformation into a growing European learning company and the leading cross-media company in Finland. Going forward, we have a balanced portfolio with two strong businesses – Learning and Media Finland – ready for growth, a solid balance sheet, and a EUR 400 million headroom for future M&A. Already at the end of April, we expect to complete the next acquisition, Alma Media’s regional news media business for an enterprise value of EUR 115 million. Even in the current exceptional times, we keep our long-term financial targets both for the Group and the SBUs unchanged,” says President and CEO Susan Duinhoven. “I would like to thank our Dutch media team for their excellent value creation, creativity and dedication during the past years. As part of DPG Media, both the team and the business will benefit from the opportunities that only a leading local cross-media company can offer. I wish our valued colleagues all the best for the future,” she continues.
Financial impacts of the divestment
The agreed enterprise value (EV) of EUR 460 million was paid at closing. The EV corresponds to an EV / Adjusted EBITDA multiple of 6.5. Sanoma will use the funds received from the divestment to reduce its debt. At the end of December 2019, the Group’s net debt amounted to EUR 795 million and net debt / Adj. EBITDA to 2.7, being temporarily above the long-term target level of below 2.5. Net debt / Adj. EBITDA will return to the target level after closing of the divestment.
Sanoma Media Netherlands has been reported as discontinued operations in Sanoma’s 2019 financial statements. Sanoma’s continuing operations include Sanoma Learning and Sanoma Media Finland SBUs, which are also Sanoma’s reporting segments.
In total, the divestment resulted in a non-cash capital loss of EUR 108 million (incl. divestment-related transaction costs), of which EUR 105 million has been booked in discontinued operations 2019 result and EUR 3 million will be booked in discontinued operations Q1 2020 result. Due to the capital loss, the Group’s equity ratio declined to 30.5% at the end of December 2019, temporarily below the long-term target level of 35-45%. The equity ratio will return to the target level after closing of the divestment.
As a result of the divestment, total goodwill in Sanoma Group’s consolidated balance sheet declined to EUR 506 million at the end of December 2019, while amounting to EUR 1,115 at the end of September 2019 and EUR 936 million at the end of December 2018.
In 2019, the Group’s free cash flow for continuing operations was approx. EUR 100 million, while the reported free cash flow including both continuing and discontinued operations was EUR 131 million. For 2020 dividend calculation purposes, the cash flow of the divested business will be excluded from the Group’s free cash flow.
About Sanoma Media Netherlands
Sanoma Media Netherlands consists of leading Dutch and Belgian magazines (incl. Libelle, Donald Duck, vtwonen) and the online news brand NU.nl. In 2019, net sales of Media Netherlands were EUR 368 million (2018: 424). Its operational EBIT excl. PPA was EUR 70 million (2018: 80) and reported EBIT EUR 68 million (2018: 58). In 2019, 61% of the SBU’s net sales were print based, 26% non-print, and 13% other sales, mainly distribution sales under Aldipress. Sanoma Media Netherlands has been reported as discontinued operations in Sanoma’s 2019 financial statements. At the end of March 2020, Media Netherlands had 1,005 employees (925 FTE), who will transition with the divested business to the buyer.
Kaisa Uurasmaa, Head of Investor Relations and CSR, tel. +358 40 560 5601
Sanoma is a front running learning and media company impacting the lives of millions every day. We enable teachers to excel at developing the talents of every child, provide consumers with engaging content, and offer unique marketing solutions to business partners.
Today, we have operations in ten countries including Finland, the Netherlands and Poland. Our net sales totalled EUR 900 million and we employed approx. 3,500 professionals in 2019. Sanoma shares are listed on Nasdaq Helsinki. More information is available at www.sanoma.com.