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 It looks like Verizon Communications Inc.'s got a plan. The company's board cleared a spinoff of the telecom's Yellow Pages unit, the company said Wednesday, Oct. 18. Months ago, rivals AT&T Inc. and Bell South Corp. dealt a heavy blow by announcing their merger which, if approved, will largely marginalize the No.2 telecommunications carrier. On Friday, July 7, Verizon Communications Inc. unveiled plans to distance itself from that game and spin off its directories unit to focus on its wireless division, fiber-optic networks and next-generation video services. A source has now told the deal that the company is leaning toward a two-step plan to spin out its yellow pages unit, in which it would look to private equity firms for capital and hand over the majority of the unit's stock to Verizon shareholders.
A source told the deal in July that the company was leaning toward a two-step plan to spin out its yellow pages unit, in which it would look to private equity firms for capital and hand over the majority of the unit's stock to Verizon shareholders. Upon announcing plans for the spinoff earlier in July, Verizon said it could sell the unit, which pulled in $3.45 billion in revenue last year. Analysts have pegged the unit to be worth $11 billion after taxes and a sale. MEASURED RESPONSE Since the AT&T-Bell South news, dealwatchers have waited to see how the company would craft a response.
The New York-based telecom heavyweight first announced it would weigh options for the unit, which publishes Web-based, residential and classified directories in December. The news came just months after Verizon won MCI Inc. with $8.4 billion. ROAMING CHARGES While the AT&T-Bell South deal lies in regulatory wait, it's the latest big-ticket proposal to come within a shrinking group of players. SBC Communications Inc. paid $16 billion for AT&T Inc. and took the old AT&T Corp. name. Regulators placed certain restrictions on the companies. The DOJ required the buyers to let rivals lease spare capacity in buildings where their networks overlapped with targets, while the FCC imposed a "net-neutrality" requirement prohibiting merging companies from blocking or interfering with data or voice services that must be carried over big phone companies' networks. The restrictions will likely prove inconsequential; the buildings covered total about 700 and the net-neutrality requirement is only effective for two years. For more on net-neutrality, see the Dealwatch overview. HOT PROPERTY Meanwhile, U.S. buyout shop Kohlberg Kravis Roberts & Co. is ready to pounce on France Telecom SA's PagesJeunes SA for about $4.2 billion.
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