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The Kelsey Report® Advisory

TransWestern Buys WorldPages for $215 Million
Charles Laughlin , 4/30/2001

Issue: The Big Get Bigger; TWP Now No. 2 Independent Publisher

News: TransWestern Publishing, backed by its chief investor Thomas H. Lee Partners, reached terms with the board of WorldPages.com to acquire the print-online Yellow Pages hybrid for $3 a share. That amounts to $215 million in cash and assumption of debt (the cash portion is estimated at $141 million). The price represents a multiple of 1.8 times WorldPages revenues, 22 times earnings before interest, taxes, depreciation and amortization (EBITDA), and 10.8 times EBITDA on the company's print directories, which provide most of its revenue.

The deal will make San Diego-based TransWestern a $280 million publisher, placing it ahead of McLeodUSA as the second-largest independent Yellow Pages publisher in the U.S. With the acquisition, TransWestern will publish 312 directories in 22 states.

Richard O'Neal, a longtime fixture in the Yellow Pages industry, has stepped down as WorldPages CEO. He will remain chairman until the deal closes, which is expected to be within 90 days. George Anderson, a WorldPages board member and former NYNEX sales executive, has stepped in as interim CEO.

In 2000, WorldPages had $117 million in total revenue, $106.5 million of which came from its printed directories. WorldPages distributes seven million directories in 42 markets, including Austin, Amarillo, Tucson, Tulsa, Ft. Worth, Portland (OR), Tacoma and Seattle.

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