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Telephone-directory company R.H. Connelley Corp. will pay a reported $340-360 million for the online business directory Business.com Inc.

The deal represents the increasing influence of the Internet in the yellow-pages and white-pages business of Donnelley, which publishes paper and online directories in 28 states under the AT&T, Dex and Embarq names, among others.

(…)

The Santa Monica, Calif., company has cash flow — of about $15 million — that will be but a minuscule portion of Donnelley’s 2006 operating income of $442 million. Traditional publishers are nonetheless willing to pay top dollar for Web-based businesses, given their overall growth rate and the wider consumer shift to Internet habits.

For that reason, the company was pursued by companies including Dow Jones & Co., publisher of The Wall Street Journal, and New York Times Co., which lost out in the auction conducted by Credit Suisse Group.

The domain name Business.com had been bought and turned into a full online business by Jake Winebaum and Sky Dayton in 1999. They had paid $7.5 million for the domain name only - the highest domain sale price at that time.

More details on WSJ.com.