R.R. Donnelley Buys Chilean Printer

Jan 09, 2009 9:06 PM  By

R.R. Donnelley announced Jan. 2 it acquired PROSA, a Chilean Web printing company located in Santiago, for $23.5 million in cash.

The Chicago-based printer thinks the acquisition will enhance its Latin American platform and complement its existing facility in Santiago de Chile. With the addition of PROSA, R.R. Donnelley will have 15 facilities in Latin America and the Caribbean, including operations in Argentina, Brazil, Chile, Mexico and Venezuela. PROSA produces magazines, catalogs, retail inserts and soft-cover textbooks.

Donnelley has been busy in the acquisition department. In the past two years it has completed a nearly $2 billion shopping spree, including book printer Von Hoffman; printer Perry Judd’s, and catalog printer Banta Corp.

But some industry experts believe that the printing industry consolidation hurts catalogers and publishers because of reduced competition. For example, says Dan Walsh, vice president of catalog/publication papers at distributor Bradner Smith & Co., “there’s no more World Color, no more Banta, and less and less of the mid-sized printers that RRD and Quebecor have gobbled up.”

It’s the same theory on the paper manufacturing side, Walsh notes. As the mills have consolidated over the past 10 years, “there are fewer and fewer options for paper, and this reduced competition has led to higher prices for the catalogers and publishers. I think it’s great for RRD—and I don’t begrudge them for their acquisitions—but I hate to see reduced competition.”

Donnelley last month won a multiyear $100 million contract for printing catalogs and providing logistics services for Cornerstone Brands, an operating unit of HSN. The contract applies to the catalogs Ballard Designs, Frontgate, Garnet Hill, Improvements, Smith+Noble, The Territory Ahead and TravelSmith.

Still, Donnelley on Jan. 9 cut its 2008 earnings guidance Friday, blaming the unpredictable business climate, and said it won’t provide any guidance for 2009.