Issue: Sales Agent
to Become a Fully Integrated Directory Business
Pages sales agent and pre-press service provider RH Donnelly (RHD) has
emerged as the winning bidder in the race to acquire Sprint Corp.'s directory
business, Sprint Publishing & Advertising. RHD will pay $2.23 billion
for the Sprint business, which represents a multiple of 8.6 times anticipated
That is higher than
the 7.4 multiple paid on the recent QwestDex transaction. Sprint Publishing
& Advertising is expected to generate 2002 revenues of $540 million and
EBITDA of $260 million. As part of the transaction, Goldman Sachs Capital
Partners 2000 will invest $200 million in RHD by purchasing convertible
preferred stock. Goldman will take two seats on RHD's board of directors.
Bear Sterns, Deutsche Bank and Salomon Smith Barney are financing the
Sprint P&A; is currently
the sixth largest U.S. Yellow Pages publisher, with 260 directories and
distribution of 18 million. Sprint's largest markets are Las Vegas, Orlando
and Ft. Myers, Florida. Sprint P&A; has 1,000 employees, 550 of which are
in sales. Both Sprint and R.H. Donnelley are non-union companies. RHD
is currently a sales agent for Sprint in 41 markets in four states.
Once the transaction
is completed, which should occur by the first quarter of 2003, RHD will
have revenue of $567 million on advertising sales of $970 million, compared
with revenue of $73 million on sales of $605 million.