Dex One is no more.
The Cary yellow pages company announced Tuesday after the markets closed that it had completed its merger with SuperMedia, another directory publisher that hails from Texas. That merger, announced last August, creates a new company: Dex Media.
“The companies were, by themselves, probably not strong enough to continue independently,” said Greg Sterling of Opus Research, a consulting and research firm. “So this makes sense. This better positions them in the current market.”
The completion of the deal spells the loss of a corporate headquarters for the Triangle. The new Dex Media is headquartered in Dallas and headed by Peter McDonald, who previously was CEO of SuperMedia – and also was president and chief operating officer of what became Dex One from 2004 to 2008.
Dex One CEO Alfred Mockett, meanwhile, has exited the business. The chairman of the combined company is Alan Schultz, previously chairman of Dex One.
The combined company will maintain a presence in the Triangle, where Dex One had about 225 workers. But layoffs loom as a possibility as the combined company seeks to reap $150 million to $175 million in savings from the merger.
The combined company publishes yellow pages directories in 43 states and has more than 5,000 employees, including more than 2,700 salespeople, whom it calls “marketing consultants.” The two legacy companies have been aggressively moving into selling digital advertising that wasn’t limited to online directories. Dex One, for example, aligned itself with partners such as Google, Yahoo and Yelp to offer an array of online and mobile ad products.
Last year, Dex and SuperMedia combined generated $2.7 billion in revenue.
“This combination establishes Dex Media as a powerful marketing services company with digital revenue approaching $500 million and a near national footprint,” Schultz said in a statement.
Both companies were hit hard by the recession and the widespread shift of advertisers away from print media, which pushed each of them into bankruptcy. They continued to struggle after emerging from bankruptcy, however, and last month each filed “prepackaged” bankruptcies after failing to win the support of 100 percent of their lenders for restructuring their debt as part of the merger. The two companies had about $3.4 billion in debt at the end of 2012.
A federal bankruptcy court judge in Delaware approved the merger Monday. Both companies emerged from bankruptcy Tuesday to consummate the deal.
Although both companies have been expanding their digital advertising revenue, it hasn’t risen fast enough to compensate for declining print revenue.
“I would say it’s a necessary deal,” Sterling said. “Whether the combined company succeeds will be based on execution.”
Dex Media shares will begin trading Wednesday on the NASDAQ exchange under the symbol DXM.
Dex One shareholders received one share of Dex Media for every five shares they own. The deal gives them a 60 percent ownership stake in the combined business.