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Today there’s a report that three private equity firms, including Thomas H. Lee Partners, are gathering to consider a purchase of Verizon's Yellow Pages business. This would be a significant change of plans, since most observers expect the business to be "spun" instead of sold in order to avoid some large tax implications. That Thomas H. Lee is involved suggests this is a genuine effort. After all, Thomas H. Lee made millions backing TransWestern Publishing, which was sold last year to Yellow Book.

What I don't understand is why the Yellow Pages unit is not broken into some logical pieces. I would think there are numerous ex-GTE markets that are considerably more valuable to publishers such as AT&T and RHD than to one single buyer. Consider the GTE areas in Southern California — Santa Monica, South Bay, Long Beach, Palm Springs — which today make up a patch work of the Los Angeles basin. AT&T would benefit greatly by being able to offer advertisers coverage from the Pacific Ocean to the Nevada boarder. Given some of the troubling results Verizon shared in its filing, it would seem a break-up could ultimately fetch more value than the entire company.

Maybe the private equity players have just this plan in mind. With so much private equity money looking for a home, Verizon Yellow Pages — despite some of the problematic numbers — probably looks pretty darn good no matter how you cut it.

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