AT&T Sells Majority Stake of Yellow Pages Units to Cerberus Capital Management

AT&T announced plans this morning to sell a majority stake of its Yellow Pages business – including AT&T Advertising Solutions and AT&T Interactive – to private-equity firm Cerberus Capital Management LP for $950 million. AT&T, which is reconfiguring its business to focus on wireless, will maintain a 47% ownership stake in the new independent company, YP Holdings LLC (YP).

According to the press release, the new YP will include:

  • Approximately 1,200 The Real Yellow Pages® print directory titles reaching about 150 million homes and businesses in 22 states;
  •, a top 40 website according to a leading global digital measurement firm;
  • The YPSM Local Ad Network, which includes more than 300 mobile and online publisher websites nationwide providing digital reach to more than 71 million monthly unique visitors; and
  • The YPmobile® app, which allows users to search local businesses from their mobile devices.

The release states that the affected AT&T business units generated approximately $3.3 billion in revenues in 2011. The Wall Street Journal notes that the deal values the businesses at about $1.42 billion in equity – a value higher than those of popular local search sites like Yelp and Angie’s List. This high figure speaks to the continued value of Yellow Pages products in the local search marketplace.

José Gutiérrez, president and CEO of AT&T Advertising Solutions, said in the release, “This transaction makes strategic sense for both AT&T and Advertising Solutions. It enables AT&T to focus on its core strategy of leadership in wireless, IP, cloud- and application-based services. At the same time, it gives our advertising customers, partners and developers continued access to strong advertising and search innovation and performance.”

I agree this is good news for AT&T Advertising Solutions and AT&T Interactive, and our industry as a whole. The move provides both business units with the ability to move forward under a single local search and advertising strategy and leadership. Additionally, Cerberus, one of the nation’s largest private equity firms, is known for staking its reputation on the ability to drive growth in the businesses it acquires. This will be key to meeting the challenges of today’s evolving local search space and further developing AT&T’s leadership in local online and mobile search.

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