Bahraini-owned investment fund Investcorp is likely to sell its majority stake in Conduit to minority shareholder InfoNXX some time after their takeover of the Irish directory inquiries company for €90 million in cash.
Investcorp is buying 75 per cent of Conduit and InfoNXX is buying 25 per cent initially in a deal that quadruples the €15 million valuation on Conduit at the time of its refinancing by Bank of Scotland (Ireland) two years ago. The transaction, which will close in 60 days, is subject to approval by the Competition Authority.
InfoNXX is preparing for a flotation on the London Stock Exchange later this year. The US-owned company is the biggest inquiries operator in Britain and Conduit is the third biggest, so the fact that it is taking only a minority stake in the Irish company will ease British regulatory clearance of the transaction at a time when it is gearing up for an initial public offering.
Investcorp, which previously held a stake in the Spectel phone-conferencing business, has no specific expertise in the inquiries business and it will be a financial investor in Conduit.
Whenever the fund decides to bring its investment in Conduit to an end, it is unlikely to look beyond InfoNXX for a buyer. Thus the transaction yesterday can be seen as a precursor to a full integration of Conduit and InfoNXX.
In advance of the deal, Conduit secured the ownership rights throughout Europe of the Internet domain names such as 118.com and 118.co.uk, which are similar to the 118-118 phone numbers used to brand InfoNXX's core services in Britain.
If, as expected, Investcorp sells its 75 per cent of Conduit to InfoNXX, yesterday's transaction would bear similarities to the acquisition of cable TV company NTL last year by Liberty Global-owned UGC.
That sale was achieved by way of a "warehousing" arrangement, under which UGC agreed to pay its own banker Morgan Stanley €329 million to buy NTL Ireland on its behalf and hold it in trust until the deal cleared regulators.
It is likely, however, that an acquisition by InfoNXX of the 75 per cent it does not already own would be subject to fresh regulatory scrutiny, particularly in Britain.
Conduit chief executive Liam Young will receive €17.1 million for his 19 per cent stake in the company and former chairman Eddie Kerr will receive €12.6 million for his 14 per cent. Bank of Scotland (Ireland) will receive €22.5 million for its 25 per cent and a group of its private clients will receive €22.5 million for the 25 per cent they hold.
