News: REA With 'licence to expand', Schibsted spin-off eyes classified ad mergers

A planned breakup of Norwegian media group Schibsted SBSTA.OL will allow its online classified advertising business to expand via mergers and acquisitions on three continents, the company's chief executive told Reuters.

A split, announced in September and backed by major investors, will see Schibsted's MPI division, which includes international brands such as France's Leboncoin, Brazil's OLX and Britain's Shpock listed separately next year.

"MPI will have very good organic growth, but we also now have a 'licence to expand', which means that we are well positioned to take part in further consolidation, and we will consider acquisitions," Schibsted Chief Executive Rolv Erik Ryssdal told Reuters in an interview.

"For MPI we are considering acquisitions in Europe and selected emerging markets where we are already present, mainly Latin America and North Africa," he added.

Ryssdal, who will leave his current job to lead the new firm in the Spanish city of Barcelona, did not reveal how much firepower he would have for deals.

Schibsted's shares hit a record 333 Norwegian crowns when it announced the break-up on Sept. 18, and currently trade at 286 crowns, up 22 percent year-to-date, valuing the company at 65 billion Norwegian crowns ($7.60 billion).

ON THE SHOULDERS OF GIANTS While the new firm generates only about a quarter of the group's revenues and employs one third of its 8,000 staff, its greater growth potential means it could represent 60 percent of the market value, according to brokerage Pareto Securities.

Schibsted will retain its newspapers and Nordic online ad business.

"MPI will be a very big company in itself. It will be the biggest purely classifieds company in Europe, so I think the company is very well positioned itself to play an active role in the consolidation," Ryssdal said.

From a modest start publishing newspapers, Schibsted built fast-growing web sites and 'boot sale' apps in 22 countries, allowing private and professional users alike to advertise anything from secondhand items to cars, homes or jobs.

Arctic Securities analyst Henriette Trondsen said a breakup makes it easier for investors to value MPI's assets by comparing with listed peers such as Britain's Autotrader AUTOA.L and Rightmove RMV.L , Australia's REA Group (REA) and New Zealand's TradeMe (TME) .

The launch in 2016 of Facebook Marketplace FB.O weakened Schibsted's share price, but it rebounded amid signs global giants such as Facebook, Amazon AMZN.O and Alphabet's GOOG.O Google had so far had little impact on the company.

"With their immense strength, we keep a close eye on them, but what we see so far is that our strong positions have not been threatened. Quite the opposite, both (Norway's) Finn and Leboncoin grow further," Ryssdal said.

"They have not taken market share from us, they are rather expanding the market," he added. ($1 = 8.5515 Norwegian crowns)