Quad/Graphics : An Affair to Remember

It started out as a friendly, innocent lunch, which is usually how it happens. What it evolved into was the largest, most transformational acquisition in the history of the U.S. printing industry.

Somewhere between Joel Quadracci's Cobb salad and the halibut enjoyed by Mark Angelson was the groundwork of something huge and revolutionary, the genesis of an event requiring not only intestinal fortitude, but the financial wherewithal to pull off—coming on the heels of the most crippling U.S. fiscal crisis since the Great Depression, no less. Angelson, the executive nursing a once-proud printing behemoth out of bankruptcy, wasn't just hoping that Quadracci would pick up the check. Angelson wanted him to offer hope for Worldcolor's future.

Yes, as affairs go, one would be hard-pressed to top the $1 billion cash and stock deal in 2010 that enabled Sussex, WI-based Quad/Graphics to acquire Worldcolor of Montreal. That fateful lunch took place in August of 2009, and the following January both organizations shocked the printing world with their announcement. That Quad was able to perform its due diligence without word spreading like wildfire is a minor miracle in itself.

At face value, the transaction takes on the appearance of a snake swallowing a much bigger prey (Worldcolor reported revenues of $3.1 billion for 2009, with Quad at $1.8 billion). Though there was motive and opportunity involved, this is hardly a cut-throat tale. In a sense, Quadracci—chairman, president and CEO of Quad/Graphics—rescued the former Quebecor Printing, World Color Press, Quebecor World, Chapter 11 rehabber and RR Donnelley hostile takeover target.

Viewed up close, the savior spin may be difficult for some to swallow. After all, no sooner had the July 1, 2010, completion of the mega-deal became official then the wheels were set in motion to begin the integration process. In the 10 months since closing, 4.3 million square feet of manufacturing space has been eliminated. Nine plants have been shuttered. A net total of roughly 3,000 positions have been eliminated. Only 10 other printers on the PI 400 industry ranking have as many as 3,000 employees. The entire integration process is expected to take 24 months.

For Joel Quadracci, executive heir to the kingdom assembled by his father, the late Harry V. "Larry" Quadracci, this deal was a challenge unlike anything the company had ever done. After all, Quad/Graphics was a private firm that didn't make a lot of attention-grabbing moves. Sure, the elder Quadracci used to throw some extravagant bashes—remember the story of his grand entrance riding an elephant? But, to the outside world, it was a company known for technology innovation and a well-defined corporate culture; where management and rank-and-file workers alike proudly donned their blue uniforms.

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