CEO of Scout24, the online classifieds platform, Tobias Hartmann has recently announced that he is considering selling off the auto retail site to a hedge fund that already owns 7% of the business. This is after US investment firm Elliot Management publicly called for this move recently.
Spin off Scout's car business on Auto Trader's 18 times forward multiple, and it would be worth 2 billion euros. Assume the remaining business then gets Rightmove's 19 times multiple, net off debt, and the overall equity would be worth 57 euros per share according to Breakingviews calculations. That's one-quarter above a failed private-equity offer for the whole business, backed by Hartmann, which shareholders rebuffed back in May. In other words, it's a no-brainer.
So why is Hartmann only admitting as much now? One explanation is that he's relatively new to the business, having only joined last November from meal-delivery group HelloFresh . Perhaps it's a little harsh to expect a CEO to master a new industry, oversee a contentious private-equity offer and then forge a fresh strategy within months.
Regardless, the effect is that Hartmann now appears to be responding to Elliott rather than setting the agenda himself. Elliott criticised him in a letter published last week, saying that slow progress had the hedge fund "wondering if the Scout management team shares our optimism for these high quality businesses". Days later, Hartmann has partly acquiesced.
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