This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Yellow Pages Unlisted From AT&T

Stocks in this article: TVZSDEXOSPMD

NEW YORK ( TheStreet) - AT&T (T) is selling a majority stake in its Yellow Pages phonebook directory unit to private equity firm Cerberus Capital Management for roughly $950 million, as large telecoms continue to hang up on printed directory businesses.

As part of the deal, Cerberus will pay AT&T $750 million in cash and a $200 million note for a majority 53% stake Yellow Pages that will give it control of a printed phonebook business that reaches roughly 150 million homes and drew in $3.3 billion in 2011 revenue.

AT&T Dials In Cerberus for Yellow Pages Sale

AT&T will keep a minority 47% stake in Yellow pages, as it continues to focus on bolstering its service of mobile smartphones like Apple's (AAPL) iPhone. In December, antitrust regulators blocked a $39 billion merger between AT&T and T-Mobile USA, which would have expanded AT&T's wireless network and helped it keep pace with competitor Verizon (VZ).

Meanwhile, divesting control of Yellow Pages and its printed directories will allow AT&T to exit a business that is being pressured from Web-based rivals like Google (GOOG) and Yelp (YELP).

Still, Yellow Pages does have an online presence in spite of its recognizable large, yellow printed phonebooks. The business, which was housed in AT&T's Advertising Solutions and Interactive divisions runs YP.com, a top 30 Web site and an ad network that touches hundreds of online publishers and draws in 71 million monthly unique visitors, AT&T said in a statement.

In early Monday trading, AT&T shares were down less than 1% to $30.70, posting smaller declines than the broader Dow Jones Industrial Average. Year-to-date, AT&T shares have underperformed major U.S. indexes, posting a gain of less than 1`.5%.

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

"This transaction makes strategic sense for both AT&T and Advertising Solutions," said José Gutiérrez, president and CEO of AT&T Advertising Solutions. "It enables AT&T to focus on its core strategy of leadership in wireless, IP, cloud- and application-based services. At the same time, it gives our advertising customers, partners and developers continued access to strong advertising and search innovation and performance."

Other large telecoms like Verizon and Sprint (S) have already divested yellow pages businesses in recent years. In 2002, Sprint and Qwest Communications -- a unit of and CenturyLink (CTL) sold their directory businesses to a business that eventually became Dex One (DEXO). Meanwhile, Verizon spun off its yellow pages business in a unit called Idearc in 2006. Both Dex One and Idearc, now called SuperMedia (SPMD), filed bankruptcies shortly after their respective spinoffs.

Private equity firms like Cerberus and hedge fund investors like Paulson & Co., which is a large Dex One and SuperMedia shareholder may see the stable cash flows of yellow page businesses as attractive, even if overall revenue continues to fall on the threat of Web players.

In a statement, AT&T said that it expects that the deal will have a minimal effect on 2012 earnings and it won't record a material gain or loss on the sale. In the fourth quarter of 2011, AT&T took a charge of 48 cents related to its Yellow Pages division.

For more on the wireless industry, see why AT&T is still hungry for more spectrum and how a tower deal twists industry consolidation. For more on M&A, see 5 deal ready stocks loved by hedge funds.

-- Written by Antoine Gara in New York

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,814.94 -2.96 -0.02%
S&P 500 2,067.03 -2.38 -0.12%
NASDAQ 4,758.2520 +3.36 0.07%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs