Yell buys US directories

UK directories firm Yell Group has expanded its presence in the United States by buying the telephone directories business of McLeodUSA for $600m (£418m).

Yell will now operate directories services in 40 US states, more than double its previous US coverage.

John Condron, Yell's chief executive, said the deal would build on Yell's "already strong presence with Yellow Book - the leading US independent directory publisher - which we purchased in 1999".

McLeodUSA Publishing's directory business is one of the country's largest independent operators, distributing 33m copies in 267 directory editions, predominantly in the Mid West, Upper Plains and Rocky Mountain states of the US.

Yell's Yellow Books are focused on the Eastern half of the United States

The British bid pushed aside a rival offer of $535m, submitted by investment firm Forstmann Little & Co agreed late last year.

Driving down debt

Yell - formerly known as Yellow Pages - was once part of British Telecom, but was sold in June 2001 for £2.1bn by two venture capitalist firms - Apax Partners and Hicks, Muse Tate & Furse.

The sale was part of BT's drive to cut down on debt.

BT's troubles are somewhat mirrored by the situation of McLeodUSA.

The US firm is struggling to service debts of $2.9bn.

Its core businesses are local telephone and internet services, and faced with slumping demand McLeod USA is busy selling assets and cutting jobs to avoid filing for bankruptcy.

Yell's growth in the UK, meanwhile, is limited, following a ruling by industry regulator Oftel capping the rise of advertising rates at 6% below inflation.