AT&T sells majority stake in Yellow Pages to Cerberus

Justin Sullivan / Getty ImagesA discarded phone book sits in a pile at a recycling center in San Francisco.

AT&T said on Monday it had agreed to sell a controlling stake in its yellow pages business to Cerberus Capital Management for around $ 950 million, giving the private equity firm the opportunity to revive a declining transaction.

Under the terms of the deal, which had been expected for months, AT&T will receive $ 750 million in cash and a $ 200 million note. He will retain a 47% stake in the company, which is made up of AT&T Advertising Solutions and AT&T Interactive.

The deal will allow AT&T to get rid of a business that has become largely obsolete, having lost ground over the years to sites like Google and Yelp. Other telecommunications companies have already sold their yellow pages units.

AT&T has increasingly focused on its high growth wireless and Internet operations. Together, the two units contributed $ 3.3 billion to the parent company’s $ 126.7 billion in revenue last year.

Both units will be under the control of Cerberus, who has built his reputation on an ability to turn things around from disgrace. While the phone book segment – now called AT&T Real Yellow Pages – is in decline, it is generating cash flow, which calls for a private equity firm.

Any potential for business growth is likely to come from the Yellow Pages online and mobile initiatives. YP.com, the online home of the Yellow Pages, competes with other Internet advertising and local search providers. The company has also developed mobile phone applications. YP.com started offering daily deals last year to compete with Groupon.

Cerberus is probably best known for its ill-fated boom-era acquisitions of Chrysler and GMAC. The company, which is based in New York and raises money for a new fund, has recently been an aggressive buyer of distressed real estate assets.


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Marvin M. Moreno

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