Yellow pages publisher R.H. Donnelley Corp. (RHD) said Monday it has agreed to buy its larger counterpart Dex Media Inc.(DEX) for $4.2 billion, creating the third-largest yellow pages company in the country.

The combined company will publish more than 600 directories in 28 states, with a total circulation of 73 million.

Donnelley will pay $12.30 in cash and 0.24154 common share for each share of Dex, or a total of $1.85 billion in cash and 36.4 million shares of Donnelley. Shareholders of Donnelley and Dex will own 47 percent and 53 percent of the combined company, respectively.

Donnelley will also assume Dex's $5.3 billion in debt, giving the combined company a total of $10.68 billion in debt. JPMorgan Securities has committed to $10.4 billion in financing for existing debt.

The company will keep Donnelley's name and ticker symbol. Donnelley will get to pick seven board members, and Dex will get to pick six.

Subject to shareholder and regulatory approval, the companies expect the transaction to close in the first quarter of 2006.

Private-equity firms Carlyle Group (search) and Welsh, Carson, Anderson & Stowe (search) control a total of 52 percent of Dex shares, and have voted their shares supporting the transaction. Each firm will appoint one member to Dex's pool of board members.

Senior management will remain intact, with Donnelley's Dave Swanson as chief executive, Peter McDonald as chief operating officer and Steve Blondy as chief financial officer. Dex CEO George Burnett will serve as board chairman.

R.H. Donnelly's shares fell $1.11 to $62.15 on the New York Stock Exchange, while Dex Media's fell $1.98 to $2.24.