Bertelsmann Considers IPO

Bertelsmann is considering a public share offering to raise money for expansion.

Chief exec Thomas Rabe, who took over Jan. 1, says the company is looking for ways to accelerate its move into digital businesses and developing economies.

Going public would be quite a change from the media giant’s previous business methods, and is something the controlling Mohn family has strongly resisted.

Former chief exec Thomas Middelhoff – who oversaw a campaign to expand worldwide and online – was dismissed in 2002, largely because the Mohns balked at his plans to take Bertelsmann company.

Since then, the Gutersloh-based company has focused on cutting debt, while global competitors such as News Corporation and Walt Disney have pressed on to develop markets in Asia and into the digital realm.

On March 27, when Bertelsmann confirmed its 2011 revenues were up 1.2 percent to euro 15.3 billion ($20.42 billion) and operating EBIT was at euro 1.75 billion ($2.33 billion), Rabe said the company is “in a good starting position” for the next phase in of its development.

“Clearly if we are going to make more strategic and sizable investments, then more capital will be required,” he later explained during the course of a series of interviews for the world’s financial papers.

Rabe says an initial public offering is only one of several capital-raising options being considered by Bertelsmann, and that no decision would be reached until the board has undertaken a strategic review.

“It opens up the option of raising equity from third parties,” Rabe explained. “Whether we are going to use it, and when, and to what extent, remains to be seen.”

Rabe was a driving force behind BMG Rights Management, Bertelsmann’s joint venture with U.S. private equity firm KKR.

Although it’s made several acquisitions including such publishers as Bug, Chrysalis and Cherry Lane, it lost out to a Sony/ATV partnership when bidding for EMI’s publishing business.

Some Bertelsmann execs believe the monopoly regulators will require the Sony consortium to sell some EMI rights catalogues in order to win approval for their bid.

“We will of course take a look at these when they come onto the market,” Rabe said.