News & Analysis

HM Capital to acquire Yellow Pages company

HM Capital became the latest in a slew of private equity firms to invest in distributors of yellow pages directories, when it announced an agreement to acquire Phone Directories Company. The investment is the first from HM’s new Sector Performance Fund.

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Dallas-based private equity firm HM Capital Partners announced today that it has agreed to acquire Phone Directories Company, a provider of yellow pages directories based in Orem, Utah. The financial terms of the transaction, which is expected to close in July, were not disclosed.

This is the first investment of HM Capital’s Sector Performance Fund, a fund the firm is currently raising. The firm was founded in 1989 under the name Hicks, Muse, Tate & Furst. It changed its name to HM Capital Partners in 2006, about a year after front man Tom Hicks left the firm.

PDC distributes more than 8 million copies of its directories in 137 markets across the Western and Midwestern United States. The company was established 37 years ago.

This is HM Capital’s third investment in the directories category. In 2001 HM acquired Yell from British Telecom, and in 2005 the firm acquired Phone Directories Canada from PDC.

Michael Bynam will become chief executive officer of PDC upon the deal’s completion. Bynam founded Transwestern Publishing, another nationwide publisher of yellow page telephone directories, and served as executive vice president of sale from 1993 to 2003.

“PDC is an excellent directories platform with a wide range of growth opportunities, including geographic and product expansion, as well as acquisitions,” Bynam said in a statement.

Companies that distribute yellow pages directories have long been thought to be an ideal target for private equity investment, thanks in part to the stability of their revenues.

CCMP Capital Asia and the private investment arm of the Ontario’s Teachers’ Pension Plan acquired Yellow Pages Group from Telecom Corporation in New Zealand for US$1.54 billion in March, and Kohlberg Kravis Roberts partnered with Teachers’ Private Capital to buy Yellow Pages in Canada. KKR also acquired France Telecom’s PagesJaunes yellow pages business for $4.4 billion last year. In 2003 CCMP Asia and CVC Asia Pacific acquired Singapore’s Yellow Pages for $127 million.