Bain near buying Verizon Canada directories

The Boston private equity giant is reportedly nearing a $1.5 billion acquisition of SuperPages, though Carlyle and rival directories publisher may still outbid the firm.

Bain Capital is nearing an agreement to buy SuperPages, Verizon Communications’ Canadian telephone directories business, for up to a reported $1.5 billion (€1.23 billion).

The Boston-based firm is in a bidding war with rival global private equity shop The Carlyle Group as well as directories publishers RH Donnelley, The Yellow Pages Group and Yell Group.

Exact terms of the proposed transaction were not disclosed, and neither Verizon nor Bain have offered comment. However, one news report says that the buyout firm has emerged as the “preferred bidder” for SuperPages, a publisher of 118 phone directories in Alberta, British Columbia, Ontario and Quebec.

Verizon, the largest US telephone company, originally bought the Canadian directories in 2001 for $810 million. It decided to put SuperPages on the auction block in May, as Verizon recently has been selling off non-core businesses and refocusing on new technologies such as voice over IP and wireless broadband.

Indeed, this past May, Verizon also sold its Verizon Hawaii unit – including its local and long distance operations, as well as its Internet services and print directory – to Carlyle for $1.65 billion.

If the Bain deal goes through, it will mark yet another private equity play in the directories business in less than four months. At the end of May, New York buyout firm Kohlberg Kravis & Roberts agreed to sell its remaining 19.4 percent share in Canada’s Yellow Pages Group for C$743.3 million, netting three times return on investment. Factoring in KKR’s C$804.4 million sale last December of the majority of its initial shares in the company, the firm will collect about C$1.6 billion total, tripling its C$545 million investment in 2002.

The news of the potential sale of Verizon’s Canadian directories also immediately follows SBC Communications’ sale of its stake in a directory business to directories publisher RH Donnelley for approximately $1.41 billion. The deal was completed Wednesday.