Bidders for TPI prepare for expensive auction

Telefonica’s sale of Telefonica Publicidad e Informacion (TPI), its listed Spanish directories business, is expected to begin later this week. However, the price Telefonica is putting on the deal is demanding, as TPI shares closed at €9.32 on March 14, valuing it at €3.4bn and at 14x Ebitda.

Telefonica, which is being advised by BNP, is said to be targeting a multiple in excess of 12x Ebitda for TPI, in which it has a 59.9% stake.

It is already reported to have received an offer of €2.2bn from Apax Partners.

According to banking sources, bidders include World Directories owners Apax and Cinven, reported to be advised by Credit Suisse; Yell, the UK listed directories group advised by Goldman Sachs; SEAT PG owners BC Partners, CVC and Permira; and possibly a consortium of Carlyle, Providence and KKR.

Yellow Brick Road’s owner Macquarie was also suggested as a possible candidate.

TPI shares have risen by 35% since the beginning of January and a banker speculated to IFR Buyouts Europe that if bids came in at around €6.50 a share, Telefonica would be minded to announce something that might bring the price down.

Last month, Telefonica announced that it was exploring strategic options for TPI, including the sale of all or part of its stake.

TPI’s principal activities are the publication of directories and advertising using different media. In 2005, its net profits reached €127m, some 10% higher than in 2004, on revenues up 9.6% to €654m.