A Merger of Rivals in the Netherlands

European Directories and Truvo announced the possibility of a merger of their respective De Telefoongids and Gouden Gids directory operations in the Netherlands. According to the news release:

Cornel Riklin, CEO of European Directories, said “We are very excited about this proposed combination which will accelerate our plans to be a leading search company in The Netherlands with complete and comprehensive directory products in all media, from print to Internet and mobile markets.”

“Both parties recognize that a combination of their activities provides the economies of  scale needed for long term success in the increasingly competitive search advertising market,  which will also provide new development opportunities for  many of the employees”, Andrew Day, CEO of Truvo said.

Gouden Gids and De Telefoongids have been locked in a fierce battle for market superiority with De Telefoongids having gained the upper hand in the past three years with a market share of 53 percent compared with 42 percent for Gouden Gids. While Gouden Gids was once viewed as the Yellow Pages and De Telefoongids a primarily White Pages product with smaller directories, the line has significantly blurred over the years with both offering similar products. Combining both properties would bring together the significant strengths of each in regard to management leadership, product development and online products.

Truvo’s Gouden Gids product has struggled in recent years with revenues declining from a high of 134 million euros in 2003 to 121.9 million euros in 2006. Offloading Gouden Gids should play a role in improving the revenue and EBITDA of the Truvo operations. It is not clear how Truvo will benefit from exiting the marketplace or if this signals a wider cooperation between European Directories and Truvo.

The merger is not yet a done deal, according to the press release: “The proposed transaction is subject mainly to completion of the works council consultation procedures, satisfactory agreement on terms, and approval from the Dutch competition authority, the NMa. A formal NMa notification will be filed in due course. The parties will co-operate closely with the NMa and are confident that the NMa will also acknowledge the clear benefits the proposed combination offers to advertisers and users. It is expected that the proposed merger could be completed in the first half of 2008.”

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