Yellow Pages Arbitrage?

Yellow Book USA announced another acquisition this week, purchasing two directories from User-Friendly Phone Book LLC, which is itself a company that has been actively pursuing acquisitions in the U.S. independent sector.

The two properties involved are the Steel Valley and Ohio Valley directories, which have combined distribution of 225,000. What is interesting about this deal is that User-Friendly had acquired these books (and two others) only a few months ago from Champion Directories, a small Ohio-based independent.

We do not know the values of the two deals, so we have no way of knowing if User-Friendly made or lost money here (our guess is they made money). The quick flip by User-Friendly suggests it is either engaging in arbitrage Yellow Pages style, or perhaps it simply didn’t see these two directories fitting into its long-range plans and sold them to the most logical buyer on the market today.

The deals certainly underscore the observation that deal flow in the U.S. independent sector is constrained only by the availability of willing sellers and properties the consolidators are interested in buying. So far, the supply of neither appears to have been exhausted.