The R.H. Donnelley Corp., the Yellow Pages company, was near a deal Sunday night to acquire rival Dex Media Inc. for about $4.2 billion in cash and stock, executives involved in the negotiations said.
The deal, which the boards of both companies were meeting to approve Sunday night and which is expected to be announced today, would unite two of the nation’s largest Yellow Pages companies.
R.H. Donnelley publishes telephone directories in 19 states, in some areas under the Sprint and SBC brand names. Dex Media publishes directories in 14 states under the Qwest brand name. Together, the companies produce more than 81 million telephone directories a year and serve more than 560,000 small businesses that advertise in the directories.
The Yellow Pages industry has undergone an enormous amount of change in the last several years. Many telephone companies that had long produced their own directories sold those operations in an effort to pay down debt taken on during the telecom boom of the 1990s.
The businesses were bought primarily by private equity firms, which were attracted by their stable cash flow. Two such firms, the Carlyle Group and Welsh, Carson, Anderson & Stow, led the acquisition of Dex from Qwest Communications in 2003. The firms, which each paid about $775 million in cash as part of that deal, have recouped all of their money, and today their combined stake is worth about $2.2 billion.
Still, the business is not without risks. Publishers face increasing competition from Internet search engines.
Under the terms of the deal, R.H. Donnelley will pay $12.30 in cash and 0.24154 of its shares for each share of Dex. That equates to $27.58 a share.