Yellow Media Inc.'s badly beaten-up stock rebounded after the company said the pending $745-million sale of its Trader Corp. business received Investment Canada approval, giving investors hope that the transaction will proceed as planned.
But the company said completion of the sale "remains subject to satisfaction of other customary conditions" and is now expected to close by the end of July, not by the end of June, as it said when the deal was announced in March.
Yellow Media's stock, which has been hammered by short sellers, ratings downgrades and price target reductions, surged 41 cents, or 17.9 per cent, to close at $2.69 on the Toronto Stock Exchange.
In a press release, Yellow Media said: "The Federal Minister of Industry, under the Investment Canada Act, has approved the sale of Trader Corp. to funds advised by Apax Partners."
Yellow Media decided to sell the Trader division, which publishes the website AutoTrader.ca as well as printed editions of its classified ad service for auto sellers and buyers, to help reduce debt as it continues its transition to a digital company. The price of the transaction with Apax, a London-based private equity firm, is "subject to working capital and other adjustments," Yellow Media said.
Trader was formed in June 2006 with the integration of Classified Media (Canada) Holdings Inc. and Trader Media Corporation and was purchased for a total of $1.2-billion.
- With files from the Canadian Press