Directories firm Yell – owner of Britain’s Yellow Pages and its US equivalent Yellow Book, among others – agreed Monday to buy McLeod US Publishing for $600 million.

A unit of telecoms operator McLeodUSA, the group is the second biggest independent directories publisher stateside, lagging only Yellow Book.

The purchase is Yell’s first since it was sold by British Telecom last year to London-headquartered Apax Capital Partners and Hicks, Muse, Tate & Furst of Dallas, Texas [WAMN: 29-May-01].

However, the deal is dependent on receiving the green light for a recapitalisation scheme for McLeodUSA, which requires the approval of 95% of bondholders.

Although nearly one-third of bondholders rejected the plan last week, the Yell agreement provides some incentive to hurry through support for the recapitalisation – if the sale is not closed by April 30 the asking price will fall by $200,000 per day for a maximum of 90 days (making the minimum price $582m). If it is still unsettled by August 1, Yell can cancel the purchase.

Should the sale go through, it is unlikely to come up against regulatory opposition. Yell will raise its share of the independent market from 25% to 40%, and gain access to the Mid West and Western US, doubling the number of states in which the group’s directories are distributed.

News source: Financial Times