France Telecom unveils plans to float directories business

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The Independent Online

The market for European initial public offerings received a boost yesterday with the announcement by France Telecom of plans to float PagesJaunes, its directories business.

The market for European initial public offerings received a boost yesterday with the announcement by France Telecom of plans to float PagesJaunes, its directories business.

The IPO is the biggest in France for two years and one of the largest in Europe this year, along with Postbank and Snecma, the jet engine business.

European IPOs have yielded €14.7bn (£8.1bn) so far this year, compared with just 1.6bn in the same period last year. The PagesJaunes float represents significant business for the banks involved including the global coordinators and bookrunners, ABN Amro Rothschild, BNP, Lehman Brothers and Morgan Stanley. The float is being underwritten by Citigroup, Goldman Sachs International, Lazard-IXIS and SG Corporate & Investment Banking.

France Telecom will raise up to €1.8bn from the float, which it will use to finance the buyout of the minority shareholders in Wanadoo, the internet business it controls. France Telecom acquired PagesJaunes with Wanadoo but it selling off the directories business to focus on its internet businesses.

The French utility said it planned to float between 30 per cent and 43 per cent of PagesJaunes, with shares priced between €13.2 and €15.2 which would value the business at €3.6bn and €4.2bn. The price range puts the company on a multiple of between nine and 10.5 times earnings before interest, tax, depreciation and amortisation.

PagesJaunes dominates its home market and will be floated free of debt. The company had revenues of €917m and profits of €182m in 2003 and said its objective was to distribute 100 per cent of annual distributable profits to shareholders in the form of dividends. It will have a yield expected to be well above the average in Europe.

The cash generative nature of the business is expected to make it a popular IPO among retail investors and a separate offer for individual investors is being organised.

PagesJaune anticipates strong growth, with revenues likely to increase at 4 to 6 per cent a year in the next few years. Doctors, dentists and lawyers can, for the first time, advertise in telephone directories in France. The company is the leading publisher in France of printed directories and online directories.

Michel Datchary, the chairman of the PagesJaunes management board, said: "The IPO represents a major step in the evolution of PagesJaunes."

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