Shares in Yell, the UK phone directory publisher, rose some two per cent yesterday after the group’s two private equity investors confirmed they had sold their combined 34 per cent stake. The quicksale removed uncertainty that would have overhung Yell’s shares after a lock-up expired on January 11.
The two firms, Apax Partners and Hicks, Muse, Tate & Furst, sold their stake at 303p per share through investment banks Gold-man Sachs and Merill Lynch, raising around pounds 720 million.
‘Yell is trading higher on relief that the overhang has been removed from the stock. There are no other big blocks floating around, waiting to come to the market,’ said one London-based senior trader in the stock.
The trader said he thought demand for the shares had been strong.
The firms declined to comment on the reasons for disposing of the stake, although private equity houses buy companies to sell at a later time rather than to run as a long-term business.
The price represents a discount of 1.5 per cent to the previous day’s close. Yell is the UK’s dominant publisher of telephone directories and is the leading independent directory publisher in the United States, where it competes against the Baby Bells. Apax and Hicks, Muse, Tate & Furst bought Yell from BT Group for pounds 2.1 billion and then floated the business last July in the largest London share flotation for two years.
Under the terms of the lock-up the two private equity groups pledged not to sell their stakes within 180 days of last year’s flotation of Yell.
But Merrill and Goldman agreed to waive the lock-up so as to outwit hedge funds who typically sell stock before lock-ups expire in the hope of buying them back more cheaply afterwards.
After the stock market closed on Tuesday, the brokers set about placing the 238 million shares owned by Apax Partners and Hicks, Muse, Tate & Furst.
The two brokers opened the books at 4.30pm and closed them at 6pm with strong demand from financial institutions.
‘We are extremely pleased with the strength of institutional demand for Yell shares and look forward to creating further value for our new and existing shareholders,’ Yell chief executive John Condron said in a statement. Yell’s placing was completed in a few hours, with the order books oversubscribed, according to sources familiar with the transaction.
The speed of the sale and its strong take-up bode well for Yell’s share price performance in the wake of the sale, the trader said.
