Quad/Graphics and Transcontinental Swap Assets in Canada and Mexico

François Olivier, president and CEO of Transcontinental, said, “The acquisition of the Canadian assets of Quad/Graphics is in line with our strategy to strengthen our more traditional print assets in Canada and is key to maintain a solid business going forward given the competitive and industry dynamics. It will allow us to leverage the over $700 million in investments we made to our printing platform over the last several years, it will generate significant synergies and it will better equip us to face the new challenges in our industry.

“The print markets in general have suffered from overcapacity and more intense competitive pressures in certain niches in recent years, with the proliferation of digital and Web communication platforms, technological advances in new printing presses as well as the entry of U.S. players in the Canadian marketplace. These transactions will permit us to improve our capacity utilization rate and better equip us to face these new challenges,” continued Olivier. “We thank all the employees in our Mexican operations for their dedication and outstanding contribution to the company’s success.”

“By acquiring Transcontinental’s Mexican assets, we will become the leading producer of magazines, retail inserts and catalogs in Mexico,” noted Tony Scaringi, newly named president and general manager of Latin America. “We will roll out Quad/Graphics’ long-standing best practices in Lean Enterprise, safety and technical education to the expanded platform, further enhancing our position as the sustainable, value-added print producer for all of Latin America.”

Quadracci added, “Through this transaction, we will be redeploying our capital to the emerging market in Mexico, which has a growing middle class and a population more than three times the size of Canada. To drive growth in Canada would have required a substantial capital investment.

“Canada is a lower growth, highly competitive print market with excess capacity. That market reality, combined with declining revenues and earnings, and along with the underfunded pension obligations of the Canadian business, makes Canada a less-compelling long-term value creation opportunity for us compared to Mexico.”

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