Adevinta the Subject of €14 Billion Private Equity Takeover Bid as It Logs Double Digit Revenue Growth in Q3

The Norway-based online classifieds operator Adevinta has published its results for Q3 of the FY23 financial year. Highlights from a report on the company's activities published two days ahead of schedule include:

• Total consolidated revenue was up 12% year-on-year at €454 million for the quarter.
• Total consolidated EBITDA was up 29% at €171 million at a 37.6% margin.
• Revenue from real estate was up 11% year-on-year while consumer goods transactional revenue increased 51%.

Commenting on the Q3 results, Adevinta CEO, Antoine Joteau said:

"This quarter has seen us continue to deliver against our business and strategic roadmap, which we have driven forward with continued business integration measures and operational verticalization. This focused work by teams across Adevinta has seen our revenues, EBITDA and margins improving substantially year on year. This puts us on an excellent footing to close out the year. "

Adevinta's portfolio includes real estate verticals in Spain (Fotocasa and Habitaclia), Brazil (VivaReal, and Zap joint venture), France (A Vendre A Louer) and Ireland (Daft.ie joint venture) as well as many leading horizontal classifieds platforms (Leboncoin in France and Kleinanzeigen in Germany) and car and job verticals mainly in Europe.

Growth in Transactional Revenue and increased margins in Q3

The company's three largest operating segments all saw growth in the quarter with Adevinta's German cars portal Mobile.de seeing a 26% year-on-year rise in revenue as traffic increased 9% and listings volumes picked up.

Adevinta's strategy is to verticalize services and move towards a more transactional business model to capture a greater part of the value chain. The company will be pleased that transactional revenues increased 51% year-on-year although they only made up around 5% of total quarterly revenue.

Revenue from online classified ads, which still represents the majority of Adevinta's business, increased 15% year-on-year while advertising revenue fell 8% compared to the third quarter of 2022.

The strong revenue growth in Q3, decreased marketing spend (-20%) and a favourable spread of expenses translated to a 29% uptick in EBITDA.

Like rival AVIV Group, Adevinta is looking to converge its assets onto one tech platform. The company noted that its efforts to do so are progressing as planned.

Adevinta confirmed its 2023 full-year outlook. The company expects double-digit revenue growth in core European markets with EBITDA at the top end of the previously stated €620-€650 million range. Further deleveraging is expected as the company anticipates its EBITDA margin to increase to between 40-45% by 2026.

€14 billion bid from private equity consortium backed by major shareholders

Adevinta's Q3 report was published two days early and might be one of the last it ever releases as a public entity as the company was the subject of a €14 billion bid from a private equity consortium led by Permira and Blackstone.

The bid was made public via a press release yesterday straight after the Q3 results and did not come as a surprise as Bloomberg had previously reported that a $4.5 billion loan deal was being drawn up to finance a large bid for Adevinta.

Worth NOK 115 per share, the private equity sell-out deal would represent a 54% premium on Adevinta's volume-weighted average share price over the last three months.

Under the proposed terms eBay would retain a 20% stake in Adevinta with its original parent company Schibsted retaining a 13.6% interest. Both key shareholders, who together with Permira hold 72% of Adevinta shares, support the bid. Jamie Iannone, CEO of eBay said:

"We would sell half our stake for approximately $2.2 billion in cash at a premium of more than 50% to the undisturbed price of Adevinta shares. We would recognize immediate value in the short-term, while continuing to maintain a financial interest in Adevinta alongside Schibsted and other world-class investors.”

Lionel Assant, Head of European Private Equity in Blackstone, said:

“We believe our offer provides attractive value and certainty for shareholders, whilst helping Adevinta take advantage of its long-term growth opportunities in a rapidly changing landscape. Access to flexible capital in a private context will ensure Adevinta remains competitive in this environment. We believe we can drive forward Adevinta’s strategy in the interest of the company and its stakeholders.”

Despite the buying and selling parties expressing enthusiasm for the deal, Adevinta's Board was lukewarm about the bid in a release on the company's website saying that "the Company over time can generate greater value than what is reflected in the Cash Consideration."

With or without the Board's unanimous blessing the deal is widely expected to be completed in Q2 of 2024.