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October 29, 2012

German Publisher Burda Increases Its Bid In Line with Takeover of Xing AG

By Shankar Pandiath, TMCnet Contributor

Privately held German publisher Burda has increased its bid in line with the proposed takeover of the professional social network Xing AG. It is also slowly reducing its dependence on traditional printed media. Burda raised its stake to 38.89 percent in Xing triggering a mandatory offer and disclosure agreement to minority shareholders.

For the remaining stake Burda is offering 44 euros per share – valuing Xing, considered to be the LinkedIn (News - Alert) of Germany at 240 million euros ($ 311.03 million) which is a 20 percent premium to Thursday’s (October, 25, 2012) closing price.

Xing is the LinkedIn of Germany, said Silke Trösch, director of corporate communications at parent company Hubert Burda Media. She also added that Xing is the biggest professional social network in Germany, Austria and Switzerland.

 Heike Pauls, Commerzbank analyst advised shareholders against tendering their shares. He felt that the offer was too cheap for a growth stock with consolidation upside and thinks that LinkedIn may come forward with a better offer at some point in time. According to him Burda’s offer values Xing at less than eight times 2012 earnings before taxes, interest, depreciation and amortization (EBITDA).

Burda traditionally offered printing services and produced magazines. Since nineties however it started investing heavily in digital business. According to the Burda’s latest announcement about 50 percent of its revenue now comes from its digital offerings. Since 2009 Burda has been Xing’s main shareholder to cope with declining revenue from print business, mainly from the magazines such as “Bunte” and “Focus.”

Xing on Friday said that it would study the offer. It added that Burda has been a good strategic investor and Xing was looking forward to the future in which Burda would expectedly continue playing an important part. Xing, the professional social network connects companies looking for employees and the professionals seeking jobs. Xing has about 12.4 million members worldwide. About 5.7 million of Xing’s members reside in German-speaking countries. Xing makes money by advertising and selling premium subscriptions. It competes with privately held Viadeo and U.S. peer LinkedIn. LinkedIn though a giant with over 175 million members across the globe lags behind Xing in Austria, Germany and Switzerland with about 2 million users, assessed at the end of June.

Shareholders are holding on and hope for a better offer. Reflecting the shareholder’s sentiment Xing’s shares were up 18.2 percent at 44.10 euros on Friday (26 October, 2012).

Xing is pleased that Burda does not plan fundamental changes to its business or its bodies, said Marc-Sven Kopka, Xing's vice president of corporate communications in an email. He added that at this point in time we can say that Burda has always been a good strategic investor and will continue to uphold this stance in the future.




Edited by Rich Steeves
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