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- Release Date: 13/01/14 13:25
- Summary: ASSET: TLS: Telstra to sell majority stake in Sensis
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TLS
13/01/2014 11:25
ASSET
REL: 1125 HRS Telstra Corporation Limited
ASSET: TLS: Telstra to sell majority stake in Sensis
Monday 13 January 2014 - Telstra today announced it had entered into an
agreement to sell a 70 percent stake in its directories business, Sensis to
US based private equity firm, Platinum Equity for A$454million.
The sale excludes the voice services business and includes economic benefits
to Telstra from services it will continue to provide to Sensis. Telstra will
retain a 30 per cent shareholding with Sensis now valued at A$649million.
Platinum Equity is a leading global private equity firm with a highly
specialised focus on business operations and 18 years of success in acquiring
and operating businesses which have been part of large corporate entities.
Among the transactions Platinum Equity completed in 2013 were carve outs from
AP Moeller Maersk, CBS, CheckPoint Systems, Emerson and Deutsche Post DHL.
Chief Executive Officer, David Thodey said he was committed to the new
partnership and believed the agreement was the right strategic fit for both
Telstra and Platinum Equity. He said the new partnership would maximise the
value of the Sensis asset for Telstra shareholders.
"We have spent the last two years enhancing our print directories business
with a rich set of digital directory offerings. Sensis is now the leading
digital marketing services and directories business in Australia. To drive
further momentum, we believe it is the appropriate time to introduce Platinum
Equity, as a strategic partner," said Mr Thodey.
"Platinum Equity will operate Sensis as a separate entity, giving it the
focus it needs to extend and enhance customer offerings and benefits in an
agile digital world."
The transaction price is equal to a multiple of 2.4 times Sensis' FY14
forecast EBITDA after adjusting for the voice directories business (which is
being retained by Telstra) and stand alone costs of operating the business.
This is consistent with valuations for recent directories transactions
globally.
The sale proceeds of A$454million are incremental to Telstra's FY14 free
cashflow guidance of A$4.6billion to A$5.1billion. Telstra expects to book an
accounting loss on Sensis of approximately A$150million subject to completion
timing and adjustments. Approximately A$100million is expected to be
included in the December 2013 half year results with the balance accounted
for on completion, which is expected in the second half of FY14.
Post completion Telstra will record its future share (30%) of Sensis net
profit after tax in its EBITDA. The value of Telstra's retained shareholding
incorporates the impact of debt financing for the acquisition.
Platinum Equity Chairman and CEO Tom Gores said he was pleased about the
strong relationship his firm has developed with Telstra.
"We have had great collaboration with Telstra and we believe the partnership
will provide Sensis a level of consistency that is good for the business as
it transitions to a standalone enterprise," Mr. Gores said.
Mr. Gores said the Platinum Equity team looks forward to working with
management to drive the business forward.
"We will empower management's focus on the core directories business while
evaluating and pursuing prospective new strategic initiatives," added Mr.
Gores.
Mr Thodey said Telstra had run a competitive sale process to select the right
partner to maximise the value of the business.
"The fact that we have retained a 30 per cent stake in Sensis shows our
belief it will continue to lead the market and deliver value to Telstra
shareholders," said Mr Thodey.
"Sensis has been an important business for Telstra shareholders and the cash
flow generated by Sensis over time has contributed significantly to our
ability to invest in the growth of our core telecom businesses."
Sensis will continue producing and distributing the White Pages Directory as
required under conditions of Telstra's Carrier Licence. Telstra will also
continue to provide directory assistance (1223) services as required under
conditions of Telstra's Carrier Licence. Voice services including the 1234
and 12456 services are a part of Telstra's core telecom offering and will
continue to be operated by Telstra as an ongoing supplier to Sensis.
Following completion, Telstra will consider the net proceeds from this
transaction, consistent with its capital management framework.
ENDS
Media contact Telstra: Nicole McKechnie, +61 (0) 429 004617
Email: [email protected]
Media contact Platinum Equity: Daniel Whelan, +1 310-282-9202
Email: [email protected]
Ref number: 002/2014
End CA:00245993 For:TLS Type:ASSET Time:2014-01-13 11:25:32