Zap CEO Nir Lempert, 2012
Zap CEO Nir Lempert. Photo by Eyal Toueg
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German media and publishing empire Axel Springer is in negotiations to buy the Israeli price comparison website Zap for 140 million shekels ($40.5 million).

The talks come just a month after the German company’s Springer Digital Media unit bought the Israeli classified advertising website Yad2 for 806 million shekels.

Axel Springer’s acquisition of Zap could present antitrust concerns, however, since Yad2 owns its own Israeli price-comparison site, Kama, which is a Zap competitor.

Senior Axel Springer executives were in Israel last week to negotiate with the institutional investors that own Zap over acquiring all their shares. The acquisition would include assuming all of Zap’s estimated 80 million shekels in net liabilities, which brings the total value of the Axel Springer offer of 220 million shekels. Zap has about 20 million shekels in cash and debt of about 100 million shekels.

But sources close to the negotiations said Monday that Zap CEO Nir Lempert, who is leading the effort to sell the company on behalf of its shareholders, favors separate offers being made by the Israeli private equity funds FIMI and Sky, even though they have put a lower valuation on Zap and are offering to buy only a 50% stake. The funds have each offered between 80 million shekels and 100 million shekels for half the company, without assuming any liabilities.

Berlin-based Axel Springer is one of Europe’s largest media groups. Its publications include the German tabloid Bild, Germany’s largest-circulation newspaper, and Die Welt, a national daily also published in Germany. Its media holdings extend to Poland, Russia and the Czech Republic as well.

Zap used to be known as Dapei Zahav, the Israeli equivalent of the Yellow Pages telephone directory. It made the transition to the digital age, but problems with its capital structure have made the company unable to repay 353 million shekels to bondholders and another 160 million shekels to Bank Hapoalim.

Zap assumed the debt when Markstone Capital Group bought control of the company in a leveraged buyout at a company valuation of $110 million in 2004. Three years later, Markstone sold Dapei Zahav for $123 million to the Australian investment firm Babcock & Brown, which collapsed in 2008. In the absence of a dominant shareholder, Lempert swapped the company’s debt for equity.