EXHIBIT 99.1
[Yell logo]
news release news release news release news release news release
For Immediate Release 17 May 2005
PROPOSED ACQUISITION OF TRANSWESTERN FOR $1,575M ((POUND)829M)
STRENGTHENING YELL'S POSITION AS A LEADING INDEPENDENT PUBLISHER OF DIRECTORIES
IN THE USA. CREATING SUBSTANTIAL VALUE.
o Yell Group plc ("Yell") announced today that Yellow Book USA, Inc. ("Yellow
Book"), its US business, has entered into a definitive agreement for the
purchase (the "Acquisition") of TransWestern Holdings, L.P.
("TransWestern") from Thomas H. Lee Partners, CIVC Partners, LLC and
TransWestern's management, for USD 1,575 million (GBP 829 million) in cash.
o TransWestern is a leading independent directory publisher in the US. Its
extensive footprint in 25 states, including core positions in California
and Texas, is strongly complementary to Yellow Book's operations.
TransWestern publishes 332 directories and also offers online yellow pages
advertising services through WorldPages.com.
o John Condron, Chief Executive Officer of Yell Group, said:
"We are delighted to have come to agreement with TransWestern, which we
have long identified as a unique acquisition opportunity among US
independent directory publishers. This acquisition establishes Yell as the
third largest directory publisher globally. TransWestern significantly
expands and enhances our US platform for future organic growth, brings the
potential for material synergies and strengthens our Yellow Book brand, the
only national yellow pages brand in the US. It is value creating in its own
right and it enables us to continue to drive up Yell Group's overall
earnings growth."
o John Davis, Chief Financial Officer of Yell Group, said:
"TransWestern strengthens Yellow Book's ability to take advantage of the
continuing share-shift in the US from incumbent to independent directory
publishers and combines this with strong acquisition synergies. The
acquisition will be earnings enhancing in the first full financial year
post completion. The financing structure ensures an efficient balance
sheet, and we are confident of the strength of the free cash flows the
enlarged group will deliver."
Yell Group plc. Registered Office:
Queens Walk, Oxford Road, Reading, Berkshire RG1 7PT.
Registered in England No. 4180320.
STRATEGIC RATIONALE
o This Acquisition continues Yell's strategy of developing a substantial
presence in the fast-growing US market and expanding Yell's platform for
future organic growth. As with its previous acquisitions, the TransWestern
platform should enable Yellow Book to further enhance future organic growth
through a combination of same market growth and new launches.
o The Acquisition establishes Yellow Book as the fifth largest directory
publisher in the US, based on combined revenues in the region of USD 1.5bn
for the 2004/05 financial year, and further strengthens its position as a
leading independent directory publisher in the US.
o TransWestern complements Yellow Book's footprint by adding established
positions in the Northwest, West and Southwest regions, and is particularly
complementary in California, Texas and Florida.
o Yell expects that combining Yellow Book and TransWestern's operations will
create significant value through operational synergies, increased
opportunity for cost-effective launches and revenue enhancement.
FINANCIAL IMPACT
o For the financial year ended 31 December 2004, TransWestern reported, under
US GAAP, revenue of USD 358 million and EBITDA of USD 99.3 million.
o Yell expects the Acquisition to deliver annualised synergies of
approximately $69 million in the third full year of ownership. In the
intervening period 2006/07 and 2007/08, annualised synergies will be
approximately $36 million and $53 million, respectively. These synergies
are expected to result from sales, procurement and production efficiencies
and more cost-effective overhead and back office functions.
o In order to drive revenue growth, Yell plans annual investments in
marketing support and additional distribution of approximately $13m in the
2005/06 financial year, rising to approximately $20m in the 2006/07
financial year, and maintained at that level thereafter. Additionally, Yell
will harmonise Yellow Book and TransWestern's customer payment terms. This
will be achieved through working capital investments in the 2005/06 and
2006/07 financial years.
o Yell expects the Acquisition to be broadly earnings neutral for the
remainder of the 2005/06 financial year and earnings enhancing in the first
full financial year following completion.
o On a combined basis, the enlarged Yell Group would have generated
approximately 55% of its revenue and 48% of its EBITDA from US operations
in the 2004/05 financial year, compared to approximately 48% of revenue and
40% of EBITDA on a standalone basis in the same year. The increased
proportion of revenue from the higher growth US operations will drive the
Group's earnings growth at a higher rate over the next few years.
o The return from the Acquisition is expected to be in excess of Yell's cost
of capital of 8.5% and therefore will be value enhancing.
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FINANCING
o Yell has agreed a new (pound)2bn credit facility, fully underwritten by ABN
AMRO, BNP Paribas, Citibank, HSBC and JPMorgan Chase. This refinances all
of Yell's existing bank debt, as well as funding the Acquisition.
o Based on Yell and TransWestern's strong cash generation, Yell expects to
reach a target leverage of 4.0x net debt/EBITDA by 31 March 2006, assuming
a full twelve months contribution from TransWestern.
INTEGRATION
o Yellow Book and TransWestern's combined businesses publish 897 directories
in 45 states plus Washington DC, with a total circulation of approximately
100 million directories.
o The enlarged Yellow Book group will employ approximately 6,000 sales
executives.
o Yell's management has extensive experience of successful acquisition
integration and will lead the integration of TransWestern's operations into
Yellow Book's business.
o Yell has completed 26 US acquisitions since 1999, including McLeod and
National Directory Company in 2002 and more recently Feist in 2004.
CONDITIONS TO CLOSING
o The Acquisition is conditional on approval by Yell shareholders and is
subject to Hart Scott Rodino notification.
YELL FINANCIAL RESULTS FOR THE YEAR ENDED MARCH 31, 2005
o Yell is today publishing its preliminary results for the year ended 31st
March 2005 in a separate announcement.
o Within these results, Yellow Book delivered 22.3% revenue growth to $1,149m
and adjusted EBITDA growth of 38.9% to $300 million in the 2004/05
financial year.
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BACKGROUND INFORMATION
o The US yellow pages industry is estimated to have grown at a c. 5% CAGR in
value over 1998-2004 to reach c. $15bn in 20041. Independent yellow pages
publishers have grown at a c. 14% CAGR over the period and currently
account for over 15% of the total market in value. (1)
o Yell's strategy has been to complement its leading UK position by
establishing a strong foothold in the US, initially through the acquisition
of Yellow Book USA in August 1999.
o Yell subsequently expanded its position as a leading independent directory
publisher in the US through the acquisition of, inter alia, McLeod in April
2002, National Directory Company in December 2002, and Feist in March 2004.
o Yell's US operations have achieved strong organic growth in the US through
a combination of same market growth and new launches.
o Over the five years since it entered the US, Yell's US operations have
delivered a 37% compound annual growth rate ("CAGR") in revenue and a 64%
CAGR in adjusted EBITDA. During this period, the EBITDA margin has risen
from 12.7% to 26.1%.
INFORMATION ON YELL
o Yell is an international directories business operating in the classified
advertising market through printed, online and telephone-based media.
o In the year ended 31 March 2005, Yell published 111 directories in the
United Kingdom and 565 in the United States; in the United Kingdom, where
it is a leading player in the classified advertising market, it served
501,000 unique advertisers. In the United States, where it is a leading
independent directories business, it served 455,000 unique advertisers.
o Yell's brands in the United Kingdom are Yellow Pages, Business Pages,
Yell.com and Yellow Pages 118 24 7, and in the United States are Yellow
Book and Yellowbook.com, all of which are trademarks.
INFORMATION ON TRANSWESTERN
o With headquarters in San Diego, California, TransWestern is a leading
independent yellow pages publisher in the United States, with 332
directories distributed in 25 states.
o For the financial year ended 31 December 2004, TransWestern reported, under
US GAAP, revenue of USD 358 million, EBITDA of USD 99.3 million, profit
before tax of USD 26.6 million and negative net assets of USD 492 million.
______________________
(1) Source: Veronis Suhler Stevenson's "2004 Communication Industry Forecast &
Report"
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o Total circulation of directories was 24.7 million books as at 31 December
2004.
o TransWestern had 2,528 employees as at 31 December 2004.
o Further financial information, including an accountants' report on
TransWestern, will be included in the Circular.
ADDITIONAL INFORMATION
Rothschild is acting as sole financial adviser to Yell in relation to the
Acquisition.
Merrill Lynch is broker to the transaction.
A circular (the "Circular") giving further details of the Acquisition and
containing a notice of an extraordinary general meeting ("EGM") of Yell to
approve the Acquisition will be sent to shareholders in the near future.
ENQUIRIES
YELL
Jill Sherratt: +44 (0) 118 950 6984 / +44 (0) 7764 879808 (mobile)
Jon Salmon: +44 (0) 118 950 6656
ROTHSCHILD
Warner Mandel: +44 (0) 20 7280 5000
David B. Peterson: +1 (212) 403 3675
MERRILL LYNCH
Mark Astaire: +44 (0) 20 7628 1000
Tony White: +44 (0) 20 7628 1000
CITIGATE DEWE ROGERSON
Anthony Carlisle: +44 (0) 20 7638 9571
Michael Berkeley: +44 (0) 20 7638 9571
Yell will brief analysts today at 9am on both its financial results for the year
ended 31st March 2005 and the proposed acquisition of TransWestern. Details will
be circulated.
N M Rothschild & Sons Limited ("Rothschild") is acting for Yell in connection
with the Acquisition and no one else and will not be responsible to anyone other
than Yell for providing the protections offered to clients of Rothschild nor for
providing advice in relation to the Acquisition.
Merrill Lynch International is acting exclusively for Yell in connection with
the Acquisition and for no one else and will not be responsible to anyone other
than Yell for providing the protections afforded to its clients or for providing
advice in relation to the Acquisition.
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This news release contains forward-looking statements. These statements appear
in a number of places in this news release and include statements regarding our
intentions, beliefs or current expectations concerning, among other things, our
results of operations, revenue, financial condition, liquidity, prospects,
growth, strategies, new products, the level of new directory launches and the
markets in which we operate. Readers are cautioned that any such forward-looking
statements are not guarantees of future performance and involve risks and
uncertainties, and that actual results may differ materially from those in the
forward-looking statements as a result of various factors. You should read the
section entitled "Risk Factors" in Yell Finance B.V.'s 31 March 2004 annual
report on Form 20-F filed with the US Securities and Exchange Commission (the
"SEC") on 8 June 2004, for a discussion of some of these factors. We undertake
no obligation publicly to update or revise any forward-looking statements,
except as may be required by law.
Any statement to the effect that the Acquisition is expected to be earnings
enhancing for Yell should not be interpreted to mean that the earnings per share
in the financial year following the Acquisition, or in any subsequent period,
will necessarily be greater than those for any completed financial period.
A copy of this release can be accessed at:
www.yellgroup.com/announcements
-------------------------------
Our subsidiary, Yell Finance B.V., is expected to furnish
its results for the year ended
31 March 2005 to the SEC on Form 20-F in June 2005.
A copy of this filing can also be accessed on the Yell Group website.
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