Is Sensis the Next One on the Block?

A report in Australia€™s The Age newspaper citing unnamed sources within the Australian government says the spin-off of Sensis Pty. Ltd. by its parent company Telstra is in the works. The story was posted on theage.com.au on Feb. 8.

Within the same news cycle, Telstra issued this brief statement in response to The Age story:

€œWith respect to the speculation in today€™s Age newspaper in relation to Sensis Pty. Ltd., the Telstra Board continuously monitors and reviews the company€™s businesses. However, the Telstra Board has taken no decision to sell Sensis Pty. Limited.€

Ben Bradlee, the legendary former editor of the Washington Post, might have called this statement a €œnon-denial denial.€

According to The Age, the public float is expected to take place ahead of the government€™s auction of its remaining 51.8 percent stake in Telstra. The story suggests Sensis would command in the range of A$10 billion (about US$7.5 billion), which would amount to roughly 15 times 2004 EBIT, a rich multiple to be sure, but we would expect the company to go for a premium valuation.

We have long seen Sensis as one of the top operators in the global directional media industry. This is particularly so because of its efforts over the past few years, under recently departed CEO Andrew Day, to build a diverse product mix designed for a future that is not reliant on print revenues, and after improving internal processes and customers satisfaction levels to enable the company to execute on a broader media strategy.

What do you think? Is Sensis worth such a high multiple? How will the float change the direction of the company? And what, if any, reverberations will there be around the industry if The Age has this story right?

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