June 06, 2001 - 4:43pm EST by
2001 2002
Price: 2.88 EPS
Shares Out. (in M): 0 P/E
Market Cap (in $M): 135 P/FCF
Net Debt (in $M): 0 EBIT 0 0

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Description is a short-term arbitrage opportunity. WPZ publishes and distributes yellow page directories in
Texas, Oklahoma, California, Washington,Oregon, Utah and Arizona. The Company also designs and produces web
sites for yellow and white page publishers.

WPZ is the subject of a takeover from TransWestern Publishing, a firm backed by Thomas H. Lee
(ie. the LBO fund). TransWestern is one of the largest independent US telephone directory
publishers, with about 270 directories spanning 18 states. So, this deal is strategic
to the buyer.

Getting to the specifics of the deal - WPZ is being bought out at $3.00 cash per share.
Given its current price of $2.88, that is a 3.1% return (or 37.2% annualized) using $0.03 commission
per share and a one-month timeframe till closing.

The only event left before closing is the shareholder meeting which is scheduled for June 27.
The deal should have no problem receiving shareholder approval since 23.9% of the shareholders
have entered into agreements to vote in favour of the deal (a majority of shareholders are
required to approve the deal).

The reason for the large spread has been the fact that the deal was subject to financing. Over
the last few days, the financing condition has been met. According to the SPZ CFO,
"the transaction is now fully funded". This removes the real risk to the deal.
The market has been slow to react to this news as most "clean deals" trade at single
digit annualized returns.

On the downside, if the deal does not go through, WPZ would fall to around the $2.25 range, where
it was before the deal was announced.

Overall, this is a high-quality, strategic deal where the major financing hurdle has been removed and
the shareholder vote should not be an issue.


The deal should close around the end of June, after the shareholder vote on June 27,
causing the price to move to the $3.00 level.
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