KKR AND TEACHERS’ MERCHANT BANK TO ACQUIRE
BELL CANADA’S DIRECTORIES BUSINESS IN
CANADA’S LARGEST EVER PRIVATE EQUITY TRANSACTION
-- Company is the Leading Yellow Pages™
and White Pages Publisher in Canada --
MONTREAL, NEW YORK and TORONTO, September
13, 2002 – Kohlberg Kravis Roberts
& Co. (“KKR”) and Ontario Teachers’
Pension Plan today announced the signing of
a definitive agreement with BCE Inc. pursuant
to which KKR and Teachers’ Merchant Bank
will acquire the telephone directories business
of Bell Canada – Canada’s largest
publisher of directories – as well as
related Internet directory assets, such as YellowPages.ca
and Canada411.com.
The Bell Canada directories business markets
and distributes telephone directories to more
than half the population of Canada, primarily
in Ontario and Quebec. On a pro forma basis
to reflect the transaction, the Company is expected
to generate approximately C$590 million of revenue
and C$345 million of EBITDA in 2002. Nearly
all of the Company’s revenues are derived
from the sale of Yellow Pages™ and white
pages advertising to a diversified customer
base of more than 250,000 advertisers. The Company
owns exclusive rights to the Yellow Pages™
brand name in Canada and will continue to be
the official Bell Canada directory publisher.
The purchase price for the transaction is C$3
billion, including approximately C$900 million
of equity capital and C$2.1 billion of debt.
Bank of Nova Scotia, CIBC World Markets and
Credit Suisse First Boston are financing the
debt. The deal will be Canada’s largest-ever
private equity transaction, topping the February
2000 acquisition of Shoppers Drug Mart for C$2.6
billion by a KKR-led consortium that also included
Teachers’ Merchant Bank.
Upon the closing of the transaction, KKR and
Teachers’ Merchant Bank will own approximately
60% and 30% of the Company, respectively. In
addition, BCE will acquire a 10% equity interest
in the Company. The directory business’s
management team will also purchase an ownership
interest in the Company as part of the transaction.
Henry Kravis, a founding partner of KKR, said,
“We are excited about the prospects of
acquiring such a high quality franchise in Canada.
KKR has had great success over the years acquiring
strong divisions out of larger companies and
working with management to grow those businesses
and create value. We see a tremendous opportunity
to repeat that success here. We also look forward
to partnering once again with our friends at
Teachers’ Merchant Bank, as well as with
BCE and the outstanding management team of the
directories business.”
Jim Leech, Senior Vice President of Teachers’
Merchant Bank, added, “Following the success
of the Shoppers' Drug Mart transaction, we are
pleased to be able to continue our successful
track record of working together with KKR to
invest in Canada. We're delighted to be a sponsor
of the Yellow Pages™, one of the strongest
brands in Canada. The Yellow Pages™ is
an icon in every household in Ontario and Quebec,
and is very attractive to us as a stable business
with substantial cash flows.”
Michael Sabia, President and CEO of BCE, said,
“We are very pleased with the outcome
of this process. The Company goes forward with
the full support of excellent partners in KKR
and Teachers’, and BCE will continue to
work closely with the business as both an investor
and an operating partner.”
The directory business’s senior management
team – including Marc Tellier, who will
remain in his post as President and CEO of the
Company – will also participate in the
transaction. “We are very excited to work
with KKR and Teachers’ to continue our
Company’s growth plan,” commented
Tellier. “We remain focused on providing
a quality product to our Yellow Pages™
users and our advertisers, who benefit from
the highest return on investment of any advertising
medium. We believe there are countless opportunities
to expand the Company in the Canadian directories
market.”
Alex Navab, a KKR partner, added, “We
have invested a significant amount of time and
energy to understand the North American directories
marketplace, and we are very pleased to have
succeeded in acquiring what we believe is one
of the most attractive companies in the industry.
We are confident that Marc Tellier and his management
team will capitalize on the Company’s
leading market share and strong brand recognition
to drive significant growth in the future.”
The transaction, which is subject to customary
closing conditions, is expected to close by
the end of November 2002.
About Bell Canada’s Directories
Business
The Bell Canada directories business being acquired
by KKR and Ontario Teachers’ is the Canadian
market leader in print and web-based directories.
The Company publishes 209 directories with a
total circulation of approximately 17 million.
It serves a clientele of over 250,000 advertisers
across Canada and manages a customer database
of more than 2.5 million listings available
in print and on the Internet at popular Web
addresses, including www.yellowpages.ca.
About KKR
KKR is a private investment firm headquartered
in New York; Menlo Park, California; and London,
England. For more information, please visit
www.kkr.com.
About Teachers’ Merchant Bank
Teachers' Merchant Bank is the private equity
arm of the $68-billion Ontario Teachers' Pension
Plan. With a portfolio of over $4 billion, Teachers'
Merchant Bank is one of Canada’s largest
private investors working with more than 100
companies around the world to create value by
providing long-term flexible capital.
About Bell Canada
Bell Canada is Canada’s largest telecommunications
company and a subsidiary of BCE, Inc.
Contacts:
For KKR:
Josh Pekarsky/Ruth Pachman
Kekst and Company
(212) 521-4800
For Ontario Teachers Pension Plan:
Lee Fullerton
Ontario Teachers’ Pension Plan
(416) 730-5347
www.otpp.com
For Bell Canada’s Directories Business:
Daniel C. Hansen
Communications
(514) 934-6509
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