Yell Group Lbo Case
Memo for Valuing Cross-Border LBO of Yell Group
Group 5: Li Xiao, Xia Liu, Minghao Gu, Shine Li
Table of Contents
1. Purpose and Overview
2. Acquiring Yell Group Is a Good Choice for Apax and Hicks Muse
2.1 Directory Industry has enjoyed fast growth both in U.K. and U.S.
2.2 Yell Group is a good LBO candidate
2.3 Apax and Hicks Muse are experienced media investors
3. Valuation
3.1 Valuation Method
3.2 FCF of BT Yellow Pages
3.3 FCF of Yellow Book USA
3.4 Interest Tax Shield
3.5 Valuation Result
4. Other Issues
4.1 the Transaction Method of this Deal
4.2 Sensitivity Analysis
Exhibit
Exhibit 1: Re-Projection and pro-forma of BT Yellow Pages
Exhibit 2: Data for Comparable Listed Companies (five-year average unless otherwise indicated)
Exhibit 3: CCF Valuation for BT Yellow Pages
Exhibit 4: Re-Projection and pro-forma of Yellow Book USA
Exhibit 5: Data for Comparable Listed Companies (five-year average unless otherwise indicated)
Exhibit 6: CCF Valuation for Yellow Book USA
Exhibit 7: Tax Shield Valuation
Exhibit 8: CCF Valuation Result
Exhibit 9: Sensitivity Analysis
1. Purpose and Overview Yell Group runs the directories businesses of British Telecom(BT) both in the United Kindom and the United States. BT Yellow Pages is the market- leading classified directory business in U.K. while Yellow Book USA is the market-leading independent publisher of business directories in U.S.. Currently, British Telecom is under pressure to reduce its heavy debt load, had been wavering for months about the future of its two Yellow Pages divisions. Hicks Muse and Apax are two biggest global private equity firms and they were under pressure to reach a final consensus on the valuation of Yell and how much to bid for it. The deal was crucially important to both Apax and Hicks Muse because of its high visibility-simply by virtue of its size and complexity, it would leave its mark on the reputations of both private equity firms. However, since
Group 5: Li Xiao, Xia Liu, Minghao Gu, Shine Li
Table of Contents
1. Purpose and Overview
2. Acquiring Yell Group Is a Good Choice for Apax and Hicks Muse
2.1 Directory Industry has enjoyed fast growth both in U.K. and U.S.
2.2 Yell Group is a good LBO candidate
2.3 Apax and Hicks Muse are experienced media investors
3. Valuation
3.1 Valuation Method
3.2 FCF of BT Yellow Pages
3.3 FCF of Yellow Book USA
3.4 Interest Tax Shield
3.5 Valuation Result
4. Other Issues
4.1 the Transaction Method of this Deal
4.2 Sensitivity Analysis
Exhibit
Exhibit 1: Re-Projection and pro-forma of BT Yellow Pages
Exhibit 2: Data for Comparable Listed Companies (five-year average unless otherwise indicated)
Exhibit 3: CCF Valuation for BT Yellow Pages
Exhibit 4: Re-Projection and pro-forma of Yellow Book USA
Exhibit 5: Data for Comparable Listed Companies (five-year average unless otherwise indicated)
Exhibit 6: CCF Valuation for Yellow Book USA
Exhibit 7: Tax Shield Valuation
Exhibit 8: CCF Valuation Result
Exhibit 9: Sensitivity Analysis
1. Purpose and Overview Yell Group runs the directories businesses of British Telecom(BT) both in the United Kindom and the United States. BT Yellow Pages is the market- leading classified directory business in U.K. while Yellow Book USA is the market-leading independent publisher of business directories in U.S.. Currently, British Telecom is under pressure to reduce its heavy debt load, had been wavering for months about the future of its two Yellow Pages divisions. Hicks Muse and Apax are two biggest global private equity firms and they were under pressure to reach a final consensus on the valuation of Yell and how much to bid for it. The deal was crucially important to both Apax and Hicks Muse because of its high visibility-simply by virtue of its size and complexity, it would leave its mark on the reputations of both private equity firms. However, since