Yellow Pages Group to Acquire Classified Media (Canada) Holdings Inc., a Canadian Leader in Classified Advertising
National platform in vertical media with opportunity to build upon our online presence
Montréal (Quebec), May 1, 2006 – Yellow Pages Group (YPG) through Yellow Pages Income Fund (TSX: YLO.UN) announced today that it has entered into a definitive agreement to acquire Classified Media (Canada) Holdings Inc. (Trader Canada), a leading Canadian provider of classified publications and related web sites, from Trader Classified Media N.V., for a purchase price consideration of $760 million payable in cash at closing. Trader Canada represents approximately 36% of the revenues of Trader Classified Media N.V.
The acquisition will result in the creation of a second national platform for YPG, this time in vertical media1 by combining YPG’s affiliate company Trader Media Corporation (TMC)’s presence in Ontario with that of Trader Canada’s in the rest of Canada. Trader Canada publishes 137 publications and nine web sites covering three product verticals, namely automotive, real estate and general merchandise. Its main brands include Auto Trader™, Auto Hebdo™, The Bargain Finder™ and Home Renters’ Guide™.
“The acquisition of Trader Canada represents the critical step in the creation of a national platform for verticals following the acquisition of TMC earlier this year. This new platform will enhance YPG’s value proposition by deepening our content and customer relationships, as well as further reinforcing our proven return on investment to advertisers,” stated Marc P. Tellier, President and Chief Executive Officer of YPG.
Management considers vertical media to be complementary to directories given the similarity in the business models, local content, direct contact with customers, and the offering of print publications and web sites. The combination and integration of Trader Canada with TMC is expected to generate recurring operational synergies through the sharing of best practices. In addition, the acquisition should provide cross-selling opportunities and accelerate the momentum in the Company’s online expansion, among other benefits.
“The combination of Trader Canada and TMC gives us a national presence in vertical media with over 200 publications and 20 web sites. We will therefore add 3.5 million unique visitors monthly2 to our already strong network of web sites,” stated Mr. Tellier. “We believe this should lead to overall increased content and traffic to our online properties and a potentially higher number of advertisers and revenues.”
Trader Canada is well-suited to YPG’s income trust structure given its consistent track record of improving financial results, its high level of free cash flow generation and its low capital expenditure requirements. The Combined Business (Trader Canada and TMC) generated revenues of approximately $297.5 million and Adjusted EBITDA of $90.9 million in 2005.
* The Combined Business (Trader Canada and TMC) is expected to be immediately accretive to the Fund’s distributable cash per unit by between 3% and 4% on a pro forma basis for the year ended December 31, 2005.
* Further accretion is expected to be derived from the realization of cost savings and operating synergies through the integration of duplicate activities and procurement, as well as the sharing of best practices.
* Management is targeting annual recurring synergies of approximately $10 million once the TMC and Trader Canada operations have been fully combined and integrated. The integration should take between 12 and 18 months after closing.
YPG has entered into acquisition credit facilities for a total of $600 million composed of a $350 million 5-year senior term facility and a $250 million 2-year senior term facility. In addition to drawings under these new facilities, YPG will use cash on hand for approximately $150 million and issue commercial paper under its existing facility to fund the acquisition and related expenses.
“Our strong capital structure positions us well for this transaction. We remain committed to maintaining our credit and stability ratings. We also expect to improve our credit metrics through a broader EBITDA base, free cash flow from operations and a potential equity offering of the Fund. Our immediate focus will be to pay down debt and integrate the combined business" declared Christian M. Paupe, Executive Vice President and Chief Financial Officer of Yellow Pages Group.
Closing of the Trader Canada acquisition is expected to occur on or about June 15, 2006, subject to regulatory clearance.
CIBC World Markets and National Bank Financial acted as financial advisors to YPG on the transaction. Trader Classified Media N.V. was represented by Beaufort Partners, LongAcre and Morgan Stanley.
For more information on the acquisition, please refer to the Media Backgrounder by clicking here.
YPG will hold an investor and media call at 8:30 a.m. (Eastern Time) on May 1, 2006 to discuss the acquisition. The call may be accessed by dialling (416) 340-2216 within the Toronto area, or 1 866 898-9626 outside of Toronto. The call will be simultaneously webcast on the Company’s web site at http://www.ypg.com/page.php/en/1/343.html.
The conference call will be archived in the Investor Center of the site at www.ypg.com. A playback of the call can also be accessed from May 1 to May 8 by dialling 1 800 408-3053, and entering the access code 3185280#.
About Classified Media (Canada) Holdings Inc.
Classified Media (Canada) Holdings Inc. (Trader Canada) is a leading publisher of classified advertising publications and web sites in all Canadian provinces except Ontario. Trader Canada is also present to a limited extent in the United States in Tennessee, Indiana and Kentucky. Trader Canada publishes 137 individual titles and hosts nine web sites under strong brands such as the Auto Trader™, Auto Hebdo™, The Bargain Finder™ and Home Renters’ Guide™ trademarks. Trader Canada’s publications and web sites cover three main product verticals: automotive, real estate and general merchandise.
About Yellow Pages Income Fund
Yellow Pages Income Fund is an unincorporated, open-ended, limited purpose trust established to invest in Yellow Pages Group. The Fund indirectly holds an approximate 96% ownership interest in Yellow Pages Group.
About Yellow Pages Group
Yellow Pages Group is Canada’s largest telephone directories publisher. Yellow Pages Group publishes annually more than 330 Yellow Pages™ directories and alphabetical pages. The Company owns and manages Canada’s most visited online directories YellowPages.ca™, Canada411.ca, as well as the CanadaPlus.ca, a network of seven local city sites. In addition, Yellow Pages Group is a leader in print and online vertical media in Ontario through Trader Media Corporation (TMC). TMC is an affiliate of Yellow Pages Group. For more information about the Company, visit www.ypg.com.
Caution Concerning Forward-Looking Statements
Certain statements in this news release may contain forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements to differ materially from those expressed in the forward-looking statements. Neither Yellow Pages Income Fund nor YPG assume responsibility for the accuracy and completeness of the forward-looking statements and do not undertake any obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.
- Contact Information
- Annie Marsolais
- Director, Corporate Communications
- Yellow Pages Group (YPG)
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