Listing could value Trader units at €1bn

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John McCall MacBain, the multi-millionaire Canadian publisher, has decided to pursue an initial public offering in London of the central and eastern European operations of his classified advertising business, Trader Classified Media.

An IPO could value that collection of newspapers and online activities at €750m to €1bn ($886m-$1.18bn).

The decision comes two months into a strategic review that was widely expected to result in the sale of the whole company. Traditional media companies such as Rupert Murdoch's News Corporation, online market leaders such as Google and Yahoo and directories businesses had all been mooted as potential bidders, but some have hesitated about buying the whole company.

The central and eastern European operations account for 35-40 per cent of the total revenues of Trader Classified Media and enjoy slightly higher growth rates than the rest of the business. They accounted for $193m of revenue in the year to June 2005 and $69m in ebitda.

If the business attracts the multiples currently applied to listed directories businesses such as Yell, it could be valued at €750m-€1bn. Analysts and bankers had estimated that the whole group could be valued at up to €2bn in a sale.

The proposal to list the division on the London Stock Exchange, in the form of Global Depositary Receipts, may prompt some bidders that walked away from the auction for the whole company to reconsider.

The remainder of Trader Classified Media consists of its Canadian-based North American operations, a large group of Spanish and Latin American titles, French and Italian businesses and a recently-acquired position in the Chinese market.

It would be more affordable to smaller buyers without the central and eastern European operations, and would come without the perceived “Russia risk”.

François Jallot, chief financial officer, said Trader expected to be able to update the market on the progress of the auction “late this year or early next”.

He emphasised the company was “still working in parallel with all the other options” and could pull the IPO plan were a satisfactory bid to come in for the whole company.

Other options could include spinning off Trader's online operations, which reported revenues of €30m and 30 per cent organic growth at the interim results in September.

The central and eastern European operations include a market-leading business in Russia, a Hungarian operation which has reported weaker results, and operations in the Baltic states, Croatia, Poland and the CIS. Mr Jallot said they offered “excellent growth prospects through organic development, potential acquisitions and the rapid expansion of online services.”

Trader is being advised by Morgan Stanley's Menlo Park office and by Longacre Partners in London.

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