In a move Mark Angelson, chairman and CEO of Worldcolor calls, "A transaction of truly historic significance for our industry," Quad/Graphics, the largest privately-owned printing company in North America, will be swallowing up Montreal-based Worldcolor in a largely share-based transaction that will give Worldcolor shareholders 40 percent of the combined company. Quad shareholders will retain the other 60 percent. The value of the shares will be determined closer to completion of the deal (expected this summer), when Quad/Graphics becomes a publicly listed company. The Wall Street Journal notes sources pegging the value at around US$1.3 to 1.4 billion.
"This is a transformational event for Quad/Graphics," noted Joel Quadracci, the president and CEO of the privately-held Quad/Graphics, speaking in a conference call with analysts. Quad’s annual revenues are listed around US1.88 billion, compared with Worldcolor’s US$3.25 billion.
The future Board will be comprised of six current Quad/Graphics directors and two Worldcolor directors, including Angelson who will chair the committee on integration and consolidation. This combined company will have about US$5.1 billion in annual revenue with an EBITDA of US$$647 million.
"A transaction of truly historic significance for our industry," says Mark Angelson
The acquisition is to provide Quad with increased efficiencies (specifically through procurement), a broader geographic reach and an expanded product and service mix. The agreement values the annual synergies from the merger to be around US$225 million, a number Angelson views as conservative.
Quad/Graphics is an acknowledged market leader in profitability (17.6 percent margin) and renown for its commitment to research and development and leading-edge technology. The company has 11 plants in the U.S., two in Poland and two in Latin America.
"We now are ready to take the next step in our development," said Quadracci, the 41-year-old son of company founder Harry V. Quadracci.
The merger will add Worldcolor’s nine Canadian plants, 35 U.S. plants and seven Latin American locations to the combined company.
Just days prior to the announcement Worldcolor announced a streamlining of its Canadian operations including the closure of two plants: Worldcolor Richmond Hill (which will be consolidated into the nearby Aurora plant north of Toronto), and its Bromont, Quebec plant, together accounting for some 280 positions.
