News

US print giant Quad/Graphics has announced a mainly share-based deal to acquire World Color Press, the company formed after Quebecor World fell into bankruptcy protection in 2009.

The transaction, which is expected to complete this summer, will give World Color shareholders a 40% stake in Quad/Graphics, while Quad/Graphics shareholders take a 60% stake in World Color. The expanded company will then become the second largest print company in the world behind RR Donnelley.



RR Donnelley made an unsolicited cash and share bid for World Color in May 2009 while it was under bankruptcy protection, estimated at $1.35bn (£891m). This was believed to have been raised to $1.5bn after discusssions with creditors, but the offer was subsequently dropped after negotiations failed.



The value of the Quad/Graphics deal has not been disclosed but, according to sources in the Wall Street Journal, is thought to be in the region of $1.3bn-$1.4bn.



Quad/Graphics is privately held, but the transaction would involve listing the company's Class A common stock on a US exchange. Then, after closing, each World Color common share will be exchanged at a set ratio for common shares of the combined company. The ratio will vary depending on how many World Color preferred shares are converted to common stock and how many warrants are exercised, but the result will be World Color shareholders owning 40% of the new company.



Quad/Graphics' Joel Quadracci will serve as chairman, president and chief executive of the company. The board will include the six current Quad/Graphics directors, World Color's chief executive Mark Angelson and one other director. Angelson, former chief executive of RR Donnelley, replaced Jacques Mallette at World Color in September 2009.



The companies estimate their aggregate revenues for the year ending 30 September 2009 at $5.4bn, with pre-tax earnings of $647m. The combined company will employ nearly 30,000 staff around the world.



"Combining the strengths of both companies, we will enhance our leadership position in the printing industry," said Quadracci. "With increased access to capital markets, we plan to make appropriate investments in our platform and data-driven solutions to secure the future of print.



"With our strong commitment to innovation and customer satisfaction, combined with the greater operational efficiencies we are targeting, we will be better able to achieve our strategic objectives and continue to generate industry-leading margins and profitable growth."



Quad/Graphics is already strong in both North and South America, as well as some European markets: it owns Poland's Quad/Winkowski and recently invested in e-magazine company YUDU media in the UK. Adding World Color will give it a presence in Canada, plus additional Latin American markets.



The deal still has to gain approval from the shareholders of both companies, meet regulatory approval, such as antitrust laws in the US and Canada, and get the go-ahead from the Superior Court of Quebec and the US Securities and Exchange Commission for its planned share transaction.

LINK : http://www.printweek.com/news/980036/Quad-Graphics-buy-World-Color-Press/