Platinum Equity in A$454m Australia deal

The US turnaround firm has acquired 70% of struggling yellow pages publisher Sensis from Telstra.

Platinum Equity Partners, a US private equity firm specialising in turnaround and special situations, has agreed to buy Australian publisher Sensis from media and telecommunications company Telstra, according to a company statement.

The A$454 million (€298 million; $408 million) agreement, which values Sensis at A$649 million, has Platinum taking a 70 percent stake in the business, with Telstra maintaining a 30 percent interest.

The transaction price was equal to a multiple of 2.4x Sensis’ 2014 EBITDA forecast, after being adjusted for the voice directories business, which will be retained by Telstra, according to the firms. This is consistent with valuations for recent directories transactions globally, the statement said.

The deal value was a far cry from the speculative A$3 billion figure that was reported prior to the transaction, as the business lost money for Telstra over the past three years. Sensis publishes the yellow and white pages directories, which have suffered fierce competition in recent years from online counterparts such as Google.

Telstra is expecting Sensis to book an accounting loss of about $100 million for the second half of 2013, according to the statement.

“We have spent the last two years enhancing our print directories business with a rich set of digital directory offerings. Sensis is now the leading digital marketing services and directories business in Australia. To drive further momentum, we believe it is the appropriate time to introduce Platinum Equity, as a strategic partner,” Sensis chief executive, David Thodey, said in a statement.

“Platinum Equity will operate Sensis as a separate entity, giving it the focus it needs to extend and enhance customer offerings and benefits in an agile digital world.”

Platinum Equity chairman and chief executive, Tom Gores, added, “We have had great collaboration with Telstra and we believe the partnership will provide Sensis a level of consistency that is good for the business as it transitions to a standalone enterprise.”

Platinum Equity typically invests in North America and Europe, focusing on turnaround and special situations opportunities.

In September 2013, the firm held a final close for its third fund on its $3.75 billion target, having already invested about 15 percent of its commitments, Private Equity International reported earlier. The firm launched the vehicle in 2011 and received commitments from limited partners in North America, Europe, Australia, Asia and the Middle East.