Another directory publishing asset has changed hands, with one investor cashing out handsomely and another coming in hoping to make a killing. This time the buyer is Babcock & Brown, an Australian private equity firm that is focused on media and telecommunications. The asset is Golden Pages Israel, that nation’s dominant directory publisher and increasingly a player in online local search.
The deal’s enterprise value was A$248.1 million (US$213 million), a combination of A$143.3 million in cash plus the assumption of A$104.8 million in debt. This amounts to a multiple of 10.3 times 2007 EBITDA, according to Babcock & Brown. Based on 2006 EBITDA, the multiple is 12.8, which is closer to the level of recent transactions, such as Hawaiian Telcom Yellow Pages (by Local Insight Media) and Yellow Pages Group – New Zealand (by CCMP Capital and Ontario Teachers’ Pension Plan).
The interesting comparison is to the roughly US$110 million that a private equity group led by Markstone Capital Partners paid for Golden Pages in 2004. In three years, the company’s value almost doubled.
Golden Pages is not a huge business and Israel is not a huge market. The company had 2006 revenues of just US$52 million. It does, however, have stable print revenues (no growth) plus a promising portfolio of online properties that includes IYP, mobile search, an online comparison shopping engine, a restaurants vertical, classifieds and business information. Israel has a diversified economy, with a tech-savvy population and solid growth. GDP growth is expected to be about 5 percent in 2007.