Printer Quad/Graphics announced Jan. 26 it has acquired rival World Color Press. The deal will create North America’s second-largest commercial catalog printer by sales; R.R. Donnelley is the largest.
Sussex, WI-based Quad/Graphics paid between $1.3 billion and $1.4 billion for World Color Press, according to The Wall Street Journal. But during a Jan. 26 conference call to discuss the deal, officials from both sides said the actual purchase price won’t be known until shares trade publicly between now and the time of closing–expected to be in the second or third quarter.
Privately held Quad/Graphics will register Class A common shares and list on a leading U.S. exchange, thereby becoming a public company for the first time since its founding in 1971. Quad/Graphics shareholders will continue to own Class A, Class B and Class C common shares and own about 60% of the combined company. World Color Press shareholders will receive Class A common shares for about 40% equity.
Formerly known as Quebecor World, Montreal-based World Color Press emerged from bankruptcy protection last July.
Quad/Graphics CEO Joel Quadracci will head the expanded company as chairman while World Color Press CEO Mark Angelson will join the Quad/Graphics board and chair a committee on integration and consolidation. Angelson is former CEO of R.R. Donnelley.
The expanded Quad/Graphics will have nearly 30,000 employees serving customers in the U.S., Canada, Latin America and Europe. World Color Press and Quad/Graphics recorded aggregate unaudited revenue for the 12-month period ended Sept. 30 of $5.1 billion and aggregate unaudited adjusted EBITDA of $647 million.
Quad/Graphics’ management estimates that the new company will generate approximately $225 million in pre-tax net annualized synergies within 24 months.
Angelson said during the conference call that the deal presents a great opportunity for World Color Press’s shareholders and employees, while Quadracci called the deal “a transformational event for Quad Graphics.”
The addition of World Color “will enable us to expand the future of print,” Quadracci said. “We’ve had an incredible amount of investment in our technology and always maintained a long-term approach. We will spread that into the World Color platform into the future.”
What does the acquisition mean for catalogers? It’s probably not a good thing, Dan Walsh, vice president of catalog/publication papers at distributor Bradner Smith & Co., because “it further reduces competition for print, which usually leads to higher prices.”
What’s more, Walsh expects some of World Color’s former plants to close during the next year.