BT sells Yell

Apax and Hicks, Muse, Tate & Furst have landed the directories business for a bargain £2.14bn, significantly less than BT had hoped to get.

British Telecommunications (BT) today announced it has agreed to sell Yell, its directories business, for £2.14bn to private equity firms Apax Partners and Hicks, Muse, Tate & Furst.

The deal comprises £2.04bn in cash and £100m in loans and is expected to be completed by the end of June. BT will use proceeds from the sale to reduce net debt.

This is significantly below what BT had expected to raise for the business. BT had expected to see Yell sold for closer to £2.75bn. This was before the Office of Fair Trading (OFT) had its say.

The OFT capped the amount that Yell can charge for advertising, pegging it 6% below the rate of inflation. It is currently capped at 2% below RPI.

Yell operates in the classified advertising market through print, telephone-based and internet-based media, including the Yellow Pages and Business Pages directories, Talking Pages, Yell.com and, in the United States, Yellow Book. Last year, the company had pre-tax profits of £163m on turnover of £774m. Net assets came to £695m.

BT has been wavering for months about the sale of Yell, however Christopher Bland, BT’s new chairman, made the sale one of his first priorities when he was appointed earlier this month.

BT was advised on the sale by Rothschild and Morgan Stanley.