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Burton Increases Offer for Banta

October 2006
STAMFORD, CT—History has shown that Cenveo Inc. Chairman and CEO Robert Burton is not the shy, retiring type who takes no for an answer. In his quest to annex Banta Corp., Burton is being true to form.

Refuting the assertion that Cenveo’s bid to acquire Banta was “a highly conditional and ambiguous overture,” Burton responded by increasing his offer from $46 to $47 per share ($1.14 billion) and later mailed a formal merger proposal. Attached with the proposal was a warning—Cenveo will find ways of finishing the transaction.

“. . .if you (Stephanie Streeter) continue to entrench yourself and repeatedly ignore our proposal, we will have no choice but to explore alternative ways to successfully complete this transaction,” Burton wrote in a September 20 letter.

Streeter—Banta chairman, president and CEO—said the company would review the proposal and respond to Burton in a timely fashion. Banta, meanwhile, has embarked on a strategic initiative of its own, steps that are expected to generate $35 million in annual cost savings. Among the planned steps: The closing or sale of five printing facilities that are either unprofitable or can be consolidated into other Banta operations. In total, Banta will lay off more than 500 people, roughly six percent of its work force.

As part of the initiative, Banta will deliver a special $16 per share cash dividend to stockholders. The move did not deter Burton. In a September 5 letter to Streeter, Burton reiterated his belief that a combined company “will maintain a balanced portfolio of print and print-related services enabling it to compete more efficiently in the industry and provide even better service to its customers.”

Burton asked Streeter to meet with him to discuss the purchase. As in past courtships of graphic arts concerns, Burton refuses to discuss the specifics of a master plan for improving the company.

Addressing some concerns cited in Streeter’s August 18 letter, Burton noted that financial commitments have been made by Lehman Brothers and Wachovia to provide necessary financing to acquire Banta’s outstanding shares in an all-cash transaction.

Burton feels the $47 a share offer, a 38 percent premium to Banta’s closing price on August 8, is more than fair value for Banta, which saw its stock price spike. “I assume you realize that if we pull our $47 per share proposal, your stock will go back to the mid-to-low $30 range,” he wrote.

Among Burton’s conclusions was the belief that Banta’s $35 million cost savings plan “is a very weak attempt at fixing a large and growing problem. I believe that Banta needs to at least reduce their fixed costs by tens of millions of dollars to be competitive in today’s print environment.”

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