Woodward Partners Mark Clare is featured in the New Zealand Herald today talking about Yellow Pages Group.
Yellow Pages sale plans fall through – NZ Herald
Mark Clare has written a lot of commentary on the sale of Yellow Pages Group by Telecom ($TEL.NZ) to Hong Kong-based Unitas Capital and Canada’s Ontario Teachers’ Pension Plan (for $2.24 billion in March 2007). This commentary is on the Valuecruncher blog. Here are some highlights:
November 8 2006 – Initial Valuecruncher valuation NZ$897 million
November 9 2006 – A revision of the initial valuation making more aggressive debt assumptions (NZ$1.1 billion)
March 16 2007 – With the information that to be part of the final short-list required a bid of NZ$2.1 billion Valuecruncher look at how a bid of this size can be justified. The answer – very cheap debt that was available for private equity investors. The key quote:
“The ultimate reason the price has gone so high is that there is an unprecedented amount of cheap debt available to fund these types of private equity acquisitions. Is this cheap debt a sustainable on-going condition? Too hard to call – but if a big private equity transaction goes bad and some big lenders lose significant capital things may change. For now private equity buyers can finance certain acquisitions (Yellow Pages Group is an example – a combination of size and stable cash flows) with very cheap debt. This gives them a big advantage over potential strategic acquirers (i.e. Telstra’s Sensis with Yellow Pages Group).”
March 14 2010 – With the news of the issues at Yellow Pages Group appearing in the media, Valuecruncher look at the lessons learned
So where might the business be valued today? The Valuecruncher interactive analyst report for Yell Group (a resonable comparator) gives a 5.5x EV (Enterprise Value) / EBITDA multiple for Yell Group and assuming a NZ$130 million EBITDA for Yellow Pages (estimate) gives an enterprise value for Yellow Pages Group of NZ$715 million. Enterprise value is the value of the whole business (equity and debt).
