Donnelley Makes Play for Quebecor World
CHICAGO—The largest M&A transaction in the history of the printing industry, in the midst of the worst financial climate this country has seen in decades, could make one company a towering behemoth among modest-sized competitors.
RR Donnelley (RRD) has submitted a written indication of interest to acquire the assets and properties of Montreal-based Quebecor World for $1.35 billion in cash and stock. Such a deal, should it become reality, would transform Donnelley into a roughly $16 billion a year concern. The next largest printer would be Cenveo Inc., at about $2.6 billion.
Such a combination would give Donnelley overwhelmingly dominant positions in book, publication, catalog and direct mail printing.
Quebecor World is operating under Chapter 11 reorganizational bankruptcy rules in the United States and the Companies' Creditors Arrangement Act in Canada. It expects to emerge from bankruptcy protection in July.
The deal calls for $957 million in cash and 30 million shares of Donnelley's common stock, worth another $394 million, based on its value as of closing value on May 11. The transaction, expected to add to RRD's earnings within 12 months of their combined operations, is not subject to any financing condition and no shareholder approval is required.
In acknowledging receiving the overture from Donnelley, Quebecor World is reviewing the terms and conditions of the proposal with its financial and legal advisors, and will discuss it with the company's major shareholders. Tony Ross, spokesman for Quebecor World, refused to comment beyond what was indicated in the press release.