UPDATE 1-Springer Nature IPO likely to be cheaper and smaller than original target


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FRANKFURT (Reuters) – The market debut of Springer Nature (SPGG.DE) will likely value the publisher of science magazines Nature and Scientific American at 3.2 billion euros ($3.8 bln), less than originally targeted, one of the bookrunners organizing the deal said.

The company has guided investors to expect an issue price of 10.50 euros apiece, at the bottom of a 10.50-14.50 euro offer range. The stock will be priced later on Tuesday with trading in Frankfurt slated to start on Wednesday.

The IPO adds to a strong list of debuts in Frankfurt this year, including Siemens’ medical technology unit Healthineers (SHLG.DE) and a slew of smaller listings.

Springer Nature is selling roughly 113 million new shares worth 1.2 billion euros, while private equity co-owner BC Partners will likely refrain from exercising an option to sell some of its stake, people close to the matter said.

BC Partners declined to comment.

If an overallotment option is exercised the IPO volume would reach 1.3 billion euros, roughly on a par with the size of the recent listing of Deutsche Bank’s asset management unit DWS (DWSG.DE).

Springer Nature had offered shares worth up to 1.6 billion euros in the IPO. But demand fell short of the company’s expectations, prompting its majority owner, publisher Holtzbrinck, to double its order for new shares to 200 million euros.

The smaller-than-expected size also means that Springer Nature may not qualify soon for inclusion in Germany’s midcap stock index .MDAXI, which represents companies with the most liquid and largest free float after the country’s 30 blue-chips.

After a successful share sale, majority owner Holtzbrinck’s stake will be diluted to 35-38 percent, while BC Partners’s stake will likely be reduced to just below 30 percent.

Springer Nature was formed in 2015 through the merger of Holtzbrinck’s Macmillan Science and Education unit with BC Partners’ Springer business, which publishes scientific, technical and medical books and journals.

The tie-up was designed to make it easier to compete with the likes of RELX (REL.L) and Informa (INF.L) as publishers increasingly shift to digital content and readers use smartphones and tablets to access information.

The entire proceeds from the listing will be used to cut Springer Nature’s net debt by a third. That currently stands at roughly 3 billion euros. The company is targeting leverage of 3.5 times EBITDA after the IPO.

At the expected issue price the post-money enterprise value of Springer Nature would be 9.4 times its 2017 core earnings, a discount to peers that trade at multiples of 13-14 times.

Springer Nature, which says it is the largest English language academic book publisher with 13,000 new books every year, reported adjusted earnings before interest, tax, depreciation and amortization of 551 million euros on revenues of 1.64 billion euros in 2017.

Springer Nature is a separate company from German publisher Axel Springer (SPRGn.DE). ($1 = 0.8418 euros)

Reporting by Arno Schuetze and Douglas Busvine; Editing by Susan Fenton


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