R.H. Donnelley to Acquire Dex MediaCreates Nation's Third Largest Yellow Pages Company Expands Local Commercial Search Platform Combines Complementary Operating Strengths and Markets

Business Wire, Oct 3, 2005

CARY, NC & ENGLEWOOD, Colo. -- R.H. Donnelley Corporation (NYSE:RHD) and Dex Media, Inc. (NYSE:Dex), two leading yellow pages publishers and directional media companies, today announced that R.H. Donnelley has entered into a definitive agreement to acquire Dex Media.

Under the terms of the agreement, each Dex share will be exchanged for $12.30 in cash and 0.24154 RHD shares. In aggregate, current Dex shareholders will receive approximately $1,850 million in cash and 36.4 million RHD shares, for total equity consideration of approximately $4.2 billion. RHD will also assume Dex's net debt outstanding, expected to be approximately $5.3 billion at year end 2005.

The combined company will be the third largest print and Internet directory publisher in the United States with pro forma annual revenues of over $2.7 billion. The company will operate coast-to-coast across 28 states with over 600 directories having a total circulation of 73 million, serving over 650,000 local and national advertisers.

Strong Strategic Fit

"We are thrilled to be joining with Dex Media. This combination will create a company with the scale, innovative products and services and proven business processes to lead our industry into the era of integrated local commercial search, encompassing both print and digital platforms," said David C. Swanson, R.H. Donnelley's Chairman and Chief Executive Officer. "Dex brings a proven marketing capability, a leading online operation and a track record for innovation that will allow us to accelerate our growth."

"I look forward to working with Dave to help grow this business," said George Burnett, President and CEO of Dex Media. "RHD adds a long history of excellence in sales and marketing execution that should improve operational performance across the combined company. Significantly larger combined scale and portfolio of diversified and rapidly growing markets creates a powerful platform to drive advertising growth and efficiency of operations."

Other Terms

RHD has also agreed to repurchase the remaining outstanding convertible preferred stock issued upon completion of the Sprint Publishing and Advertising acquisition in January 2003 and held by investment partnerships affiliated with The Goldman Sachs Group, Inc. for approximately $337 million including accrued dividends. The preferred shares were convertible into approximately 5.2 million RHD common shares as of September 30, 2005. The Goldman Sachs affiliates have agreed to vote in favor of the transaction and their warrants will remain outstanding.

Upon completion of the transaction, current RHD and Dex shareholders will own approximately 47% and 53% of the combined company, respectively. The transaction is subject to approval from each company's shareholders, regulatory approval and other closing conditions and is expected to close in the first quarter of 2006.

RHD and Dex will appoint 7 and 6 directors, respectively, to the 13 member board. Both Carlyle and Welsh, Carson, Anderson & Stowe, who collectively own 52% of Dex, have agreed to vote in favor of the transaction and will each appoint 1 of the Dex appointees to the board.

Name, Headquarters and Management

The combined company, to be named R.H. Donnelley Corporation, will be traded on the NYSE under the ticker symbol RHD and will continue to be headquartered in Cary, North Carolina. The combined company will be led by Dave Swanson as Chief Executive Officer, Peter McDonald as Chief Operating Officer and Steve Blondy as Chief Financial Officer. George Burnett will serve as Chairman of the Board of Directors.

Burnett commented, "Our complementary management groups and best practices will form what I believe to be a team and organization that is unsurpassed in the Yellow Pages industry and among the leaders in local commercial search."

Swanson added, "I am very excited to work side-by-side with George and all of the talented employees at Dex. I've long admired his strategic leadership and know our company will benefit greatly from his vision and innovative marketing expertise."

Integration Plans and Synergies

The two companies are developing integration plans that build on the cultural similarities and the best practices from each company. Swanson said, "We will approach integration in a manner that closely mirrors the process we employed in connection with the highly successful Sprint Publishing & Advertising acquisition." In addition to significantly enhanced revenue opportunities, the combined company expects to generate cost savings of $50 million by the third year following the close of the transaction. The majority of the cost savings will be derived by eliminating redundant IT systems and corporate general and administrative functions.

Financing

J.P. Morgan Securities Inc. has provided commitments for approximately $10.4 billion for both the new financing and to support certain existing debt in the event any existing debt is refinanced.

Teleconference and Webcast Information

The management teams of both companies will host a conference call today at 10:00 a.m. ET (7:00 a.m. PT). You can participate by dialing 800-473-6123 (U.S.) or 973-582-2706 (outside U.S.) with conference call ID #6553874. The conference call will also be available via Webcast at www.rhd.com. For those unable to listen to the live conference call, a telephone replay will be available by dialing 877-519-4471 (U.S.) or 973-341-3080 (outside U.S.) with conference call ID #6553874. The telephone replay will be available beginning October 3, 2005 at 11:00 a.m. ET and run through October 10, 2005 at 11:59 p.m. ET. A slide presentation will also be available on each company's investor relations Web site.