Good day, welcome to the Schibsted Media Group Conference Call on the 17th of of April. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Rolv Erik Ryssdal, CEO. Please go ahead.
Thank you, moderator. I'm pleased to be hosting this call together with Chairman of the Board, Ole Jacob Sunde, and CFO, Per Christian Mørland. I'll first give a short introduction, and then we'll open up for Q&A. The topic of today's call is that the Board of Directors of Schibsted has decided to propose to the annual general meeting, scheduled for May 8th, to split the share capital of the company into two classes of shares with equivalent economic peer rights, yet different voting rights. If approved by the AGM, each holder of one existing Schibsted share will receive one share carrying 10 voting rights, that's the A share, and one share carrying one voting right, that is the B share. Schibsted will apply for listing of the class B shares on Oslo Stock Exchange, currently expected to be effective on or around June 1st this year.
The rationale of this proposal is that Schibsted wants to increase its financial flexibility, and the share split is the most efficient way to do so. First of all, I want to stress that our group strategy remains unchanged. As you know, in the online marketplaces space, we're focused on being a global leader. It means that we have to participate in the consolidation that is taking place right now in this industry in many markets. We're also looking to enter into new verticals and new markets, and we're very focused on capturing growth in emerging markets. For the media houses, our key focus remains the offline-to-online transition, and we're offering more digital products and editorial content to our consumers. We see several advantages of introducing the B share plan. The B shares gives us permanent capital for the long run without balance sheet restrictions.
It gives us flexibility to pay for potential future acquisitions in shares, and that I believe to have that currency is important. Let me also stress for the avoidance of doubt that there will be no issue of new A shares and/or B shares as part of the establishment of the B shares. Schibsted currently has no intention to issue equity, we are consented to a three-month lockup agreement not to issue class B shares from the day of the stock splits becoming effective. The main takeaway from establishing a new B share class is that there is no change of strategy. We see many interesting growth opportunities for Schibsted ahead, and this move will equip us better for the future.
If passed, the new share class increases our flexibility while allowing the Tinius Trust to permanently maintain their commitment and continued strong support of Schibsted. That was my introduction. I will now hand over to the moderator for questions. Moderator?
Thank you. If you would like to ask a question at this time, please press star one on your telephone keypad. Please ensure that the mute function on your phone is switched off to allow your signal to reach our equipment. Again, please press star one to ask a question. We will pause for just a moment to allow everyone to signal. We will now take our first question from Lars Herlin of AIM Group. Please go ahead.
This is a question to Ole Jacob Sunde, who runs the Tinius Trust. If you run a trust, you are sort of handling the will of the man who created it. In your opinion, would have been the thoughts of Tinius and Tinius Nagell-Erichsen about this deal?
Thank you for the question. I have to stress before answering it that I'm here as chairman of the board of Schibsted. Answering questions as to the Tinius Trust, isolated, I will do that briefly in this context. Mr. Nagell-Erichsen was very clear in his objective that he saw the advantage of keeping the long-term ownership of Schibsted intact. At the same time, he was eager for Schibsted to develop soundly financially over time. If you look at the objectives of the trust, this long-term ownership is clearly stated in the objectives. I think that Mr. Nagell-Erichsen would be positive.
I remember once talking to him, then he said, "A company that do not expand will be eaten by others." Therefore, it is important to develop a company over time. I think definitely this proposal is also something that he would have supported.
As I understand it, you will keep the position giving you the power of owning more than 25%, but less than 30%.
As you have seen from the proposed articles of association, there are no changes in the regulation as concerns the voting rights in the company. The articles of association is just a continuation of the articles of association that we have had since our listing in 1992.
Okay.
There.
You have a plan to change your B shares into A shares?
We have a plan to stay on.
Yes.
We have a plan to stay on as a long-term shareholder of Schibsted.
Okay. Thank you.
Next question, please.
As a reminder, to ask a question, please press star one. We will now take our next question Martin Stanzl of Danske. Please go ahead.
Hi there, gentlemen. I got two questions. First, to Rolv Erik. I can see from the slide pack you have put out that the board also asks for an authorization from the AGM to issue new B shares for up to 5% of the total share capital. Could you please repeat what you said about the intention of an equity issue now at the start?
What I said that there are no current plans for issuing new equity and no equity will be issued now in connection with this establishment of the share plan. The proxy that you're referring to is what I would call a standard procedure, but and might be used, for instance, in connection with acquisitions, but there are no current plans for that at this stage.
Okay, thank you. The second question, regarding entering new markets and verticals, would you be able to comment a bit more on what kind of markets and what kind of verticals you find interesting? Thank you.
Well, I think it's fair to say that we've had some success with our M&A part of our strategy in classifieds the last years, both in finding good assets and also integrating them, and I expect that there will be more opportunities in the time to come. I would say that we've had good experiences with doing what I call in-market consolidation, acquiring companies in markets we already operate, that will certainly be high on the agenda. We're also looking at adjacent businesses, there, you know, the should I say, the traditional verticals are, of course, very interesting.
Okay, thank you.
As a final reminder, to ask a question, please press star one. There are currently no questions in the phone queue. We will now take a question from Chris Collett of Deutsche Bank. Please go ahead.
Yes. Thank you. It's Chris Collett at Deutsche here. I just wonder if you have any anything in place that you can share with us about what sort of return you would be looking for when you do come to issue any equity. Is there any kind of hurdles or acquisition criteria that you would use?
Well, our M&A history has been that we're looking for businesses that are a good fit into our existing activities and also adjacent businesses to that. Of course, we then have an assessment of the risk and return offered. I think it's fair to say that we've been very pleased with the returns that we have achieved on the acquisition so far. We haven't explicitly stated externally the return targets.
The only thing I can add is that we do have a financial target of net interest-bearing debt to EBITDA of one to two, which we believe is prudent for a growth company. We could also go somewhat above that. We have, of course, currently some debt capacity that we certainly will use in the first phase. We do see many value accretive opportunities, meaning that it could be value to have a financial tool if we enter into negotiations, meaning that we for financial needs, certainly, need the flexibility. That's why we are establishing B class, and then later, of course, if needed, we may then use it typically in accordance with an acquisition.
Just to be clear, would your first form of financing be to use debt and then equity, or would you look at the two in combination, or would it be equity first and then debt?
No, I, as I said, it depends really on the size of the acquisition. We are looking for typically bolt-on in market acquisitions in market consolidations. And of course if this is I would say smaller medium type of acquisition, then it may be something that we can handle out of the debt situation. So it depends on really the status if we see further in the future. So that's the situation.
Yes. We believe we still have a healthy balance sheet, that there is more room left there to increase the debt. I think there's a specific point also I'd like to mention, which is the use to have the currency when doing acquisitions in shares. What we're seeing many times is that the other parties or sellers, typically entrepreneurs, they're interested in having a stake in the company going forward. That was the case last year when we invested in Spain, the entrepreneur, he really wanted to stay on as a shareholder. At that time, we allowed him. He invested and then shifted Spain, which is not a very liquid share, of course.
To have a liquid currency is itself very interesting in many of these transactions.
Sure. Thank you. That's very clear.
There are currently no questions in the phone queue. As a further reminder, to ask a question, please press star one.
Well, operator, are there any further questions?
There aren't, no. There are no questions.
Oh, well, in that case, I think, I think we'll end the telephone conference here. I would thank everyone who dialed in. Also like to emphasize that in the coming weeks, we will all be here available for phone calls and we'll also visit many of our investors and of course, be able to answer any questions or queries you might have. Thank you all for listening in and wish you a nice rest of the day and a nice weekend. Bye-bye.
Thank you. That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.