Veronis Suhler, 3i acquire Verizon units

The US merchant bank has again joined forces with the UK private equity firm to acquire six European directories businesses.

(PrivateEquityCental.net) New York-based media merchant bank Veronis Suhler Stevenson UK private equity firm 3i Group today announced an agreement to purchase six European directory operations of Verizon Communications unit Verizon Information Services for an undisclosed amount.

CIBC World Markets is the sole underwriter of the senior and mezzanine financing placed in conjunction with the transaction, the terms of which were not disclosed.

The acquisitions consist of VIS operations in Austria (Herold Business Data AG), Czech Republic (MediaTel), Hungary (GTE Yellow Pages Publishing – Hungary), Poland (Polskie Ksiazki Telefoniczne (PKT)), Slovakia (Zlate stranky MEDIATEL) and Gibraltar (Global Directory Services Company) and will affect approximately 2,000 employees. A new holding company will be based in Austria, under which the operations will conduct business using their existing company names and directory brands.

This investment continues the strategic relationship between VSS and 3i in the European directory sector, in which the two firms have partnered to jointly invest in leading European directory publishers. With the close of this transaction, VSS and 3i will have co-investments in eight European companies, totaling 313 directories with a combined circulation of 31.7m.

'This is an attractive business that builds on the momentum of our own private equity investments, alongside Veronis Suhler Stevenson and 3i's existing investments in European directory publishing and the significant growth opportunities we're seeing,' Marco Sodi, partner at Veronis Suhler Stevenson and head of the firm's London office, said in a statement.

'This is a landmark deal which is a further example of 3i's commitment to the media sector. Investing alongside VSS, one of the leading media investors, demonstrates our knowledge and ability to execute another media directories deal,' Chris Graham, director of 3i's media team, said in the statement. 'We know the industry well, and having looked at a variety of opportunities, we believe this business to be one of the fastest growing in the marketplace.'

VSS managing director Gerhard Weisschaedel will become the chief executive officer of the new group. Weisschaedel joined Veronis Suhler Stevenson in 2000 from Deutsche Telekom Medien, the publishing and multimedia division of Deutsche Telecom, where he served as the chief executive officer for four years.

Incumbent Verizon Information Services country managers will remain in their positions, with Jon Martinsen heading the Austrian and Hungarian units, Rene Pekarek in charge of the Czech and Slovakian units, and David McGuffey leading the Polish and Gibraltar units.

Veronis Suhler Stevenson and 3i have forged their partnership through two prior acquisitions in the European directory sector. In February 2003, the two firms completed the purchase of Netherlands-based De Telefoongids Media (formerly TeleMedia), the telephone directory company of Royal KPN, for E500m. In March 2002, Veronis Suhler Stevenson and 3i co-invested in the E111.5m buyout of Finland-based Sonera Info Communications, renamed Fonecta Oy, one of Finland's largest directory publishers and one of Europe's leading telephone directory services providers.

'We've been very happy with the performance of Fonecta, which has outperformed expectations,' Sodi said in the statement. 'Our investment in the Netherlands, although a recent investment, is meeting the high expectations we set for the business and management team, and we look forward to carrying this momentum into these new markets.'

Previously, Veronis Suhler Stevenson has been active in the U.S. directory publishing sector. The firm, through VS&A Communications Partners II LP, acquired Yellow Book USA. The company was later sold to British Telecom in 1999 for approximately $665m.