RRD Buys CGX - Strategic Brilliance or Competitors' Opportunity?

The printing industry was abuzz this past month with opinions about why Consolidated Graphics (CGX), the billion dollar master of the commercial printing rollup, agreed to be acquired by RR Donnelley (RRD). The deal, valued at $620 million plus assumption of Consolidated Graphics’ debt, did not reward the shareholders of Consolidated with a premium—the company sold out effectively at its current market price. Apparently top management at Donnelley liked what they saw, but only at a relative bargain price.

For the first time in the two and half years that we have been researching transactions in the printing, packaging, paper, publishing