Monday, January 29, 2007

Telecom NZ selling Yellow Pages ... Telstra in the hunt

Telstra Limited (ASX:TLS) is expected to bid against private equity firms for Yellow Pages, Telecom Corporation of New Zealand's (ASX:TEL) directories business. Fairfax Media Limited (ASX:FJX) and the Seven Network Limited (ASX:SEV) are no longer trying to acquire the business, with the remaining bidders comprising of private equity firms. Some of these bidders are rumoured to include Kohlberg Kravis Roberts & Company, The Blackstone Group, CVC Capital Partners, CCMP Capital, The Carlyle Group and Pacific Equity Partners. Indicative bids for the operation, which analysts have priced at between $A1.5bn and $A2bn, are due in early February 2007. Telecom NZ wants to finalise the sale by June 2007.

Looking at this from Telstra's position I wouldn't be happy. They are going to be fighting against a number of firms which in recent times have shown that they overvalue businesses. The amount of firms clambering to purchase this asset will surely inflate the price and will result in a no win situation for any of the bidders. On the other foot though we are going to see a very good price coming in for Telecom NZ. They are selling an asset which is going to achieve a price far above the true worth. This is a good sale for Telecom NZ shareholders.

Good Luck Investing

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