Telenor set to sell directories to Texas Pacific

The US private equity firm is the front-running bidder for the Norwegian telecoms company’s directories business.

Reports suggest that Texas Pacific Group, the US private equity firm, has outbid rivals to become the most likely candidate to buy the directories business of Telenor, Norway's state-owned and indebted telecoms business.

The bidding for the operation has been fierce, with Sweden’s Eniro rumoured to have recently bid close to E800m and a number of private equity firms having also spent several weeks poring over the business. Said one managing director of a large UK private equity firm who declined to confirm whether they had been in the bidding: “it’s a tidy operation with decent advertising revenue streams: the only issue is what’s a fair price for it.”

The Financial Times reports that the operation had pre-EBITDA earnings of circa. NKr500m [E62.6m] this year, meaning that Eniro’s bid valued the business at circa. 11 times EBITDA. The paper goes on to suggest that Texas Pacific is contemplating a bid of up to NKr6.6bn [E826bn] or 12 times EBITDA.

Although Telenor did not hemorrhage cash in bidding for a 3G license, it is nonetheless eager to reduce its debt and is therefore ready to do a cash deal with a buyer.

The European directories business continues to be a hotbed of acquisition activity, with private equity firms being active participants. British Telecoms directories business Yell was recently bought by Apax Partners and Hicks, Muse, Tate and Furst in a massive LBO transaction which saw Texas Pacific unsuccessfully team up with KKR to bid.

Eniro itself had been set to be bought by Seat Pagine Gialle until the stock-based offer was rejected by Telia, the company’s largest shareholder, as Seat’s share price slumped. Eniro, Sweden’s fourth largest directories business, last week agreed to buy the directories business of Elisa Communications, the Finnish telecoms group. The Financial Times also reports that Sonera, Finland's largest telecoms operator, is looking to sell its directories business as part of its plans to cut its E4.4bn of debt.