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Dex One And SuperMedia Will Combine To Create A National Provider Of Social, Local And Mobile Marketing Solutions

Stocks in this article: DEXO SPMD

Dex One Corporation (NYSE: DEXO) and SuperMedia Inc. (NASDAQ: SPMD):

Highlights of the Combination

  • Over 3,100 marketing consultants serving more than 700,000 local businesses
  • Pro-forma combined 2011 revenue was $3.1 billion, with non-GAAP adjusted EBITDA of approximately $1.2 billion and non-GAAP free cash flow of $610 million
  • Combined companies estimate annual expense synergies of $150-$175 million by 2015
  • Preserves tax attributes of as much as $1.8 billion to benefit cash flow
  • Merged company better positioned to retire debt with amended and extended lender agreements

Dex One Corporation (NYSE: DEXO) and SuperMedia Inc. (NASDAQ: SPMD) today announced that their Boards of Directors have approved a definitive agreement under which Dex One and SuperMedia will combine in a stock-for-stock merger of equals, creating a national provider of social, local and mobile marketing solutions through direct relationships with local businesses.

Upon closing of the transaction, Dex One shareholders are expected to own approximately 60 percent and SuperMedia shareholders are expected to own approximately 40 percent of the combined company.

The combined company will have over 5,800 employees, including more than 3,100 consultants who establish direct relationships with local business owners and offer a full suite of marketing solutions to help them retain and add customers. Initially, the combined company will have relationships with more than 700,000 businesses.

The business will benefit from improved operating scale, significant synergies and enhanced cash flow. On a pro-forma basis, for the full year 2011, the combined company would have reported $3.1 billion in revenue, $778 million in non-GAAP operating income (adjusted to exclude impairment charges of $1.8 billion) and $1.2 billion in non-GAAP adjusted EBITDA. Pro-forma cash from operations for the full year 2011 would have been $657 million, and non-GAAP free cash flow would have been $610 million. For the first half of 2012, the combined company would have reported pro-forma revenue of approximately $1.4 billion, $290 million in operating income and $586 million in non-GAAP adjusted EBITDA. First half 2012 pro-forma cash flow from operations for the combined company would have been $340 million and non-GAAP free cash flow for the period would have been $322 million.

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