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Donnelley Gives Up Bid to Acquire Quebecor World

June 12, 2009
CHICAGO—Like a prize heavyweight title fight that ends a minute into the first round, RR Donnelley's decision not to pursue Quebecor World any further brought to a premature end what could have been a protracted battle waged in two nations—one company vying to establish the largest printing dynasty in the world, the other struggling for the chance to get back on its feet and recapture a former glory.

The proposed deal died over a three day period this week. On Monday, RR Donnelley improved its bid to $1.56 billion to acquire the Montreal-based printer. The offer was summarily rejected Tuesday by a Quebecor World determined to see its bankruptcy emergence reach fruition. On Wednesday, Donnelley folded its hand.

"We are disappointed by the decision of Quebecor World to reject our June 8 proposal," said Tom Quinlan, RR Donnelley's president and CEO. "We believe that our proposal was undoubtedly in the best interests of creditors based on a comparison of the distributions under our proposal with the distributions under the proposed standalone plan of reorganization. We are particularly disappointed because of the efforts and concessions made by us to adapt our proposal in response to concerns that were communicated to us.”

RR Donnelley's initial proposal to Quebecor World was made May 12, then modified based upon feedback received from certain Quebecor World creditors that addressed, among other things, taxes and employee pension plans. The modified deal was submitted June 2, with the "best and final" offer, which included $178 million more in cash, coming this past Monday.

“This would have been an excellent fit for RR Donnelley and the best opportunity for the Quebecor World creditors," Quinlan's statement continued. "However, given our view of the Quebecor World operations, a transaction ascribing a higher value to Quebecor World than we offered in our last proposal is simply not in the interests of RR Donnelley. We look forward to continuing to pursue other strategic initiatives.”

As for Quebecor World, it's full speed ahead. Its creditors are scheduled to vote on the company's restructuring plan on June 18. Under the plan, creditors will receive equity in the new company, though existing shares will have little or no value.

Also, it appears the rechristening cat is out of the bag. Several sources have reported on Quebecor World's filing with the Canadian Intellectual Property Office for the "Novink" trademark as its new name.
 

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