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Donnelley, Moore Wallace To Merge

December 2003
CHICAGO—RR Donnelley and Moore Wallace have signed a definitive agreement to create North America's largest full-service commercial printer with more than $8 billion in annual revenues and approximately 50,000 employees worldwide. The combined company will retain the RR Donnelley name and will be headquartered in Chicago. Upon closing of the transaction, Mark Angelson, CEO of Moore Wallace, will become CEO of the new RR Donnelley, succeeding William Davis, chairman, president and CEO of RR Donnelley. Longtime RR Donnelley director Stephen M. Wolf is to become non-executive chairman of the combined company.

Under the terms of the transaction, Moore Wallace shareholders will receive RR Donnelley shares based on a fixed exchange ratio of 0.63 of a RR Donnelley share for each Moore Wallace share. This represents (U.S.)$17.66 in value per Moore Wallace share, or approximately $2.8 billion in total equity value, a premium of 16 percent, based on the closing stock prices of both companies on the New York Stock Exchange (NYSE) on Friday, November 7, 2003. RR Donnelley will also assume approximately $900 million in Moore Wallace debt.

Upon completion of the transaction, RR Donnelley and Moore Wallace shareholders will own, respectively, approximately 53 percent and 47 percent of the combined company.

In addition to significantly enhanced revenue opportunities, the combined company expects to generate cost savings of at least $100 million on an annualized basis in the first 12 to 24 months after the closing. These savings are anticipated to result from the elimination of duplicative administrative and infrastructure costs, reduction in procurement expenses and asset rationalization.

Now a Fortune 250 Company

"The transaction will place the new RR Donnelley among the Fortune 250," notes Davis. "I am especially pleased that Mark Angelson will be leading this company and look forward to a smooth transition."

Angelson adds that the transaction is strategically and financially compelling. "The combination will enable the new RR Donnelley to offer the world's leading companies a comprehensive suite of print and related products, and solutions that will meet the demands of our growing customer base," he says.

"Through this combination, the new RR Donnelley will serve leading global, national, regional and local customers and will provide every printing need a company of any size could require."

The transaction is subject to approval by RR Donnelley stockholders and Moore Wallace shareholders, and Ontario court approval of a plan of arrangement, which will provide for the compulsory exchange of each outstanding share of Moore Wallace for 0.63 of a RR Donnelley share. In addition, the transaction is subject to anti-trust clearance and Investment Canada approval, and is expected to close in the first quarter of 2004. The transaction is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes. It is expected to be taxable to Canadian shareholders of Moore Wallace.
 

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