Quad/Graphics : An Affair to Remember

As if taking on a company much bigger than itself wasn't enough of a challenge, Quad/Graphics also decided to go public in order to facilitate the transaction. Quadracci didn't want to "lever up the balance sheet" and take on too much debt to acquire Worldcolor.

Similarly, the Quadracci family didn't want to bring aboard a private equity partner that would have short-term expectations. Rather than use a traditional Initial Public Offering (IPO) to raise money for the deal, Quad issued shares to the existing Worldcolor shareholders to complete the transaction.

The Quadracci family is ensured of generational leadership, as it holds high vote shares that allow it to control 80 percent of the vote even though it maintains just 33 percent equity ownership in the combined company.

Completely dwarfed by the Deal of the Century was Quad's acquisition of Burlington, WI-based HGI Co., a $45 million commercial, catalog, book and publication printer headed by Craig Faust, one of the industry's unheralded young superstars. The union began as an investment in HGI by Quad, with an eye toward a potential future merging. But the parties soon decided there would be more advantages in HGI joining the Quad fold. Faust now heads Quad's commercial and specialty division.

Quadracci is bullish on commercial printing opportunities. He'd gotten sufficient feedback indicating demand among customers; in-store signage has surged in popularity. He saw opportunities being created by digital technologies.

As for the potential of more deals down the road, while Quad/Graphics may never make another acquisition as large as Worldcolor, other opportunities loom. "This is a business with strong cash flow and a good balance sheet," says its CEO. "We've paid down debt more aggressively than expected, so we have a lot of tools to play with and we look at the world as a place to play, not just North America.