AT&T Inc. plans to sell most of its Yellow Pages business unit to private-equity firm Cerberus Capital Management LP, CNN Money reported.
Cerberus will pay AT&T $750 million in cash and a $200 million note, while allowing the company to retain a 47 percent equity interest in the new entity, called YP Holdings LLC, according to CNN Money.
"This will allow AT&T to focus on its core businesses," a spokeswoman told the Wall Street Journal.
Now that our fingers prefer to do the walking on smartphones, the Yellow Pages have lost pride of place in American homes. AT&T added a website – city guide and local advertising portal YP.com – to its printed directories business, but the unit still saw revenue decrease 30 percent over two years to $3.3 billion in 2011, the Wall Street Journal reported.
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Cerberus said in a statement it would "explore new avenues of online and mobile growth" for the business, the Wall Street Journal reported. Currently, the Yellow Pages unit has 8,400 workers, about half of whom are unionized, according to the Wall Street Journal. The directories are shipped to about 150 million homes and businesses in 22 states, according to CNN Money.
"The equity stake could give AT&T some option value if the new owners execute on improving the businesses' growth and profitability as a standalone entity," Raymond James telecom analyst Frank Louthan wrote in a note to clients, according to CNN Money.
If the deal gets the go-ahead from the US Justice Department, it’s expected to close midyear, the Wall Street Journal reported.
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