World Color Press Inc., the Montreal-based company formerly known as Quebecor World, will be taken over by one of the largest privately held printing companies in a deal estimated at more than US$1 billion.
The acquisition is being made by U.S.-based Quad/Graphics Inc. and will create a combined publicly traded company with 30,000 employees.
Quad/Graphics chairman and CEO Joel Quadracci said the new firm will be well positioned to compete both in digital and print media.
“In the end, we decided that the acquisition of World Color is the best decision for our company moving forward and it was not even a close call,” he told a conference call with analysts.
Quadracci said the best way to proceed with the lowest level of risk is through a largely share-based transaction.
“We believe this combination will generate meaningful cash flow that will allow us to pay down debt relatively quickly.”
World Color Press is the publicly traded company that was created when the former Quebecor printing business was restructured under court protection from its creditors.
An estimated value of the overall transaction wasn’t released by the companies, and World Color chief executive Mark Angelson said he couldn’t put a value on it yet because the new stock isn’t listed yet.
“We don’t know exactly what the purchase price is,” he said, adding the Wall Street Journal has estimated it at about US$1.4 billion.
“We’re not going to know until we see how the shares trade between now and closing” of the transaction, he said.
Angelson will join the board of directors at Quad/Graphics and the new publicly traded company will be listed on a leading U.S. stock exchange.
Angelson said Quad/Graphics management expects the transition to generate about US$225 million in net annualized cost synergies within two years, an estimate he called somewhat conservative, and more than $1 billion in new equity value.
