FRANKFURT (Reuters) - Bertelsmann (BTGGg.F) is taking full ownership of Gruner + Jahr, publisher of magazines including Stern, Brigitte and National Geographic in Germany, as Europe's largest media group looks to make up ground after being slow to expand online.
The German company, which also controls broadcaster RTL AUDK.LU and co-owns book publisher Penguin Random House (PSON.L), said on Monday it would buy the 25.1 percent stake from the Jahr family for an undisclosed cash sum.
Privately owned Bertelsmann has held a 74.9 percent stake in the Hamburg-based publisher since 1976, with the Jahr family retaining the remaining shares and veto rights over major decisions such as acquisitions and disposals.
"Taking full ownership of Gruner + Jahr gives us the opportunity to act fast and respond to rapid developments in the publishing market. It will also be easier to decide on investments," Chief Executive Thomas Rabe said on a press call.
Bertelsmann's German rival Axel Springer, which is focusing on its digital business, sold a cluster of regional newspapers and magazines this year to peer Funke Mediengruppe for 920 million euros ($1.15 billion), almost 10 times EBITDA.
A person familiar with the deal said Bertelsmann paid a much lower multiple. "With a low triple-digit million price tag Bertelsmann got a bargain," said the person, who declined to be named as he was not authorized to discuss the price in public.
Rabe declined to give any details about the purchase price, beyond saying that it was "appropriate and fair".
Publishers are shifting to digital publishing as their readers increasingly use smartphones and tablet computers to consume news and information, but Gruner + Jahr gets only about 10 percent of its sales from digital publishing.
Springer (SPRGn.DE), the publisher of Europe's top-selling daily "Bild", now makes more than half its sales and two-thirds of its core profit from digital operations.
Separately, Springer said on Monday it had spent $20 million to raise its stake in U.S. online news magazine OZY to 16 percent from 0.6 percent.
Asked how much of the Bertelsmann group's revenues come from digital, Rabe declined to give details. Analysts have said Bertelsmann, whose roots go back to the 19th century, was late in adapting to digital publishing.
Analysts were divided about the acquisition with some saying Bertelsmann would be able to act faster while retaining dividend payments from Gruner + Jahr. Others said they would have expected Bertelsmann to invest in faster-growing areas.
"Possibly there is some sort of consolidation angle here over the longer-term, i.e. merge Gruner + Jahr with another group and/or do an asset swap," said analyst Ian Whittaker at Liberum Research.
"In that case, owning 100 percent of the asset is a plus because you do not have to deal with a (potentially) troublesome minority," he said.
Gruner + Jahr, which made revenues of 2.1 billion euros ($2.6 billion) and operating EBITDA of 193 million euros in 2013, has committed to invest several hundred millions in the expansion of its online business.
It said in August it planned to cut up to 400 jobs as it seeks to reduce annual costs by 75 million euros to combat a downturn in the print media market.
Gruner + Jahr, which currently has 8,562 employees, closed its Financial Times Deutschland (FTD) newspaper title in 2012 after it piled up millions of euros in losses over 12 years.
Its flagship publications are weekly news magazine Stern and women's magazine Brigitte. Rabe told employees Gruner + Jahr would remain a "core business of Bertelsmann".
"Bertelsmann fully supports the strategy of the G+J Executive Board under Julia Jaekel, and will make available the resources necessary for its implementation," Rabe wrote in an internal memo seen by Reuters.
Additional reporting by Georgina Prodhan; Editing by Georgina Prodhan/Keith Weir