Bain ‘books’ $2.1bn quick flip

Four months after acquiring the Canadian directories business of Verizon for $1.5bn, the Boston private equity firm has agreed to sell the company to former KKR portfolio company the Yellow Pages Group for approximately $2.1bn.

Boston-based private equity firm Bain Capital has agreed to sell Advertising Directory Solutions, Canada’s second largest publisher of directories, to its largest competitor, the Yellow Pages Group, for C$2.55 billion ($2.1 billion; €1.6 billion).

The announced transaction represents a quick flip for the Boston private equity firm, which purchased the company, previously known as SuperPages Canada, last November for $1.5 billion. Verizon Communications, the company’s previous owner, reportedly selected Bain’s offer over a higher-priced bid from the Yellow Pages Group due to antitrust concerns.

In a conference call with analysts, management of Yellow Pages said they do not expect to make any concessions with regulatory agencies in order to complete the acquisition, which is expected to close by June 30.

A spokesperson for Bain declined to comment.

The private equity firm had reportedly been actively pursuing an initial public offering of the company through a Canadian income trust, following a similar strategy adopted by Kohlberg Kravis Roberts.

In late 2002, KKR and the private equity arm of the Ontario Teacher’s Merchant Bank acquired 90 percent of Yellow Pages Group for $2.3 billion from Bell Canada. After listing the company as a dividend-paying income trust on the Toronto Stock Exchange, KKR sold its shares and realised roughly $1.2 billion on an initial investment of $423 million.

The sale of ADS represents the second successful directories play by Bain Capital. In 1997, the firm acquired a stake in Seat Pagine Gialle, an Italian yellow pages business, in a €2 billion deal that included Banca Commerciale Italiani, Investitori Associati, BC Partners and CVC Partners. In 2000, the private equity firm sold its stake for a reported significant gain to Telecom Italia.

Bain has long been a major investor in Canada. In 2000, it joined a private equity consortium, including KKR; Ontario Teachers'; CIBC Capital Partners; Charlesbank Capital Partners; and DLJ Merchant Banking Partners, to acquire Shoppers Drug Mart for $2 billion. In 2003, Bain teamed with Caisse de depot et placement du Quebec to acquire the recreational products business of jet maker Bombardier for approximately $870 million.

Most recently, in November 2004, the private equity firm reportedly acquired Montreal-based discount retailer Dollarama for $890 million.