More PE interest in European directories

Consolidation in the European directories looks set to take another private equity-driven turn as 3i and Veronis Suhler Stevenson, owners of KPN’s Telemedia directories business, prepare a bid for Herold Business Data, the yellow pages business owned by Telekom Austria and Verizon Communications.

New York-based Verizon owns 74 per cent of Herold and Telekom Austria owns the remainder. Herold reported revenue of E63.8m in 2002, making it one of the smaller operations in the sector. According to Bloomberg, the two private equity firms, which paid E500m for Telemedia last November, are planning to play an active part in the consolidation of the European directories business.

Last May, the firms also acquired Fonecta Group, formerly knows as Sonera Info Communications, a Finnish directory services providers in a deal valued at E111.5m. 3i acquired a 70 per cent stake in the company, with Veronis Suhler Stevenson taking a 28 per cent stake.

In 1999, 3i was also part of the group that included Apax and Advent International that acquired TDL Infomedia, publisher of Thomson Local directories in the UK. In December 2000, the group sold this company to Italian media conglomerate Seat Pagine Gialle for an equity value of £308m and the assumption of approximately £150m of debt.

Seat Pagine Gialle is itself currently the subject of intense private equity interest, following Telecom Italia’s decision to sell its 56 per cent stake in the business. Bidding for the Italian directories business is thought to be hovering around the E5bn mark, higher than the E4.5bn originally expected, with interest coming from many of the world’s biggest buyout firms, including Kohlberg Kravis Roberts, Blackstone and Texas Pacific Group – bidding as a consortium – an alliance of Hicks Muse Tate & Furst and Apax Partners, and BC Partners, Permira, CVC and Investitori Associati.

According to today’s Financial Times, the KKR consortium is the most advanced with its bid, although the BC Partners consortium has submitted the highest offer. A buyer for the unit, which reported turnover last year of E1.99bn, is expected to be announced within the next month.

In 1999, Veronis Suhler Stevenson sold its stake in Yellow Book, a US publisher of yellow page directories, to British Telecom-owned Yell Group for $665m. Hicks, Muse and Apax, which acquired Yell Group in May 2000 for £2.14bn, are hoping to merge Yell with Seat Pagine Gialle.