R.H. Donnelley Buys Business.com for $345M, Also Boosts Profits

Cary, N.C. — R.H. Donnelley, one of the nation’s largest Yellow Pages subscribers, is expanding its commitment to online advertising in a big way.

The Cary-based company said it would pay $345 million to acquire Business.com in a deal announced Thursday before the stock markets opened.

Additionally, the founder of Business.com will join Donnelley’s management team and lead the firm’s interactive advertising efforts.

The announcement came just ahead of Donnelley’s quarterly earnings report. Donnelley (NYSE: RHD) said profits increased to 34 cents per share on revenues of $729 million. Analysts polled by Thomson Financial expected a 4-cent profit.

Business.com, which is based in California, focuses on business-to-business services, including search engine, directory and pay-per-click advertising. The company also operates Work.com. It employs some 100 people, is expected to generate more than $50 million in revenues this year, and is profitable, Donnelley said.

Donnelley plans to augment its own interactive efforts through the acquisition.

"With this transaction R.H. Donnelley takes another significant step forward in the online local commercial search marketplace," said David Swanson, Donnelley’s chairman and chief executive officer.

"Upon closing, we will immediately gain a profitable business-to-business vertical that is widely recognized as one of the leaders in the market,” he added. “We also gain technology and talent that will accelerate our capabilities with DexKnows.com and other aspects of our digital strategy."

Jake Winebaum, founder and CEO of Business.com, will become president of Donnelley’s interactive unit once the acquisition closes.

Donnelly already operates DexKnows.com (electronic yellow pages) and LocalLaunch!, a search engine marketing firm.

Winebaum was head of Internet operations at The Walt Disney Company before launching Business.com in 1999. Investors include Benchmark Capital, Institutional Venture Partners, Evercore Partners, Reed Business
Information and McGraw-Hill.