BT expands online directories business with the £20m acquisition of Ufindus

BT is beefing up its online directories business with the £20m purchase of Ufindus, an online classified advertising company with more than 1.9 million listings in its portfolio.

The acquisition, from Iomart Group, is part of BT Directories' plans to expand its community-based services. The division recently launched BT Exchanges, a service that enables consumers to find, share, review and communicate with local businesses of all kinds, rather than just look up the contact details of a specific company.

Ufindus, which generated revenues of £14m last year, has more than 20,000 small and medium-sized business customers. Companies can list their services through the three main sites – SmileLocal, MoreUK and Ufindus – and on more than 100 niche directories that focus on particular trade sectors, such as builderregister.com and bathroomspecialistfinder.com.

David Benjamin, the chief executive of BT Directories, said: "Ufindus will play an important role in the continued development of BT Directories' online portfolio. Through Ufindus' considerable expertise and experience in online classified advertising, we access further local classified product offerings, significant search traffic and new customers for this fast-growing part of our business."

The traditional paper directory business model has suffered from the growth of the internet, as consumers have increasingly turned to Google to find the nearest takeaway pizza or electrician. Yell, which publishes the Yellow Pages in the UK, has seen its stock price drop by more than 50 per cent in the past 12 months, but its internet businesses are making spectacular progress – growing 45 per cent in the UK in the past year, and 68 per cent in the US.

BT's directories business was significantly reduced by the sale of Yell, for more than £2bn in 2001, as part of the group's debt-cutting strategy. But with a renewed focus on information provided through a social-networking type model, the company is looking for growth. "BT is getting back into directories properly," one City analyst said. "The sale of Yell was probably the right call at the time, and BT is obviously much less involved without that business, but it is now looking to get back in."

Ufindus employs 300 people and its combined portfolio receives more than 9 million searches every month. It also offers business customers a website design service, as part of the online package. Oakley Capital Corporate Finance advised BT on the Ufindus deal.