by Laurie Sullivan @lauriesullivan, June 30, 2017

Dex Media announced Friday the acquisition of YP.com, a former spinoff from AT&T.

The combined company, called DexYP, will provide local business automation software and digital and print marketing products, supporting local businesses and enabling them to compete in today’s market.

The company’s business automation software and its marketing solutions suite will become available to more than 700,000 small to medium-sized business (SMB) clients across the United States.

The acquisition underscores the company’s commitment to serving America’s local businesses, DexYP CEO Joe Walsh, confirmed in a conversation with Search Marketing Daily. “If you’re a local pest control guy in Indiana, you have Terminix and Orkin trying to run you over,” he said.

Walsh notes the combined company will continue to support high-quality leads for small and medium-size businesses through search, social, display, and online and print directories. The majority of DexYP’s revenue will come from digital products.

On Thursday, citing people in the know, The Wall Street Journal reported Dex was set to pay $600 million for YP and give the company’s owners, including private-equity firm Cerberus Capital Management LP, a 3% stake in the combined company.

Jared Rowe, who took the helm as CEO of YP.com in August 2016 after leaving Cox Enterprises, will not remain with the company. Rowe, in March 2017, said YP.com would put a major focus on building machine learning into its ad serving and local listings platform.

Walsh said the new company will keep the same focus on machine learning and artificial intelligence.

DexYP’s product, Thryv, automates functions businesses performed manually in the past, such as building a digital customer list, communicating with customers via email and text, updating business listings across the Internet, as well as generating estimates and invoices, processing payments, and issuing invoices and coupons.

BIA/Kelsey “expected” the deal. This type of consolidation typically includes synergies that contribute to better margins, merging balance sheets to improve outlook against a combined revenue stream, and more cost-effective sales operations.

Based on BIA/Kelsey’s forecast for local ad spend in the print and digital directory segment, the analyst firm expects to see positive growth in digital, growing at a 5.2% compounded annual growth rate (CAGR) from 2016 to 2021.

Digital growth is strongest in areas like search, mobile and digital services such as SEM, Web sites, social media, programmatic, mobile, presence and reputation management.

Print revenue declines, however, will continue at 17.9% CAGR through 2021, as advertisers shift their ad budgets to newer media, per BIA/Kelsey.

Moelis & Company LLC served as financial advisor to Dex Media, while Weil, Gotshal & Manges LLP acted as lead legal counsel to Dex Media. Goldman Sachs served as financial advisor to YP, and Schulte Roth & Zabel LLP acted as legal counsel to YP.

MediaPost.com: Search Marketing Daily

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