Consolidation in the print sector. With RR Donnelley just reporting an 18% drop in sales last week, it looks like the way to satisfy the shareholders is through acquisitions:
TEL AVIV (MarketWatch) — R.R. Donnelley & Sons Co., (RRD 12.99, -0.15, -1.14%) the Chicago printer, proposed to acquire the assets of Quebecor World Inc., (QBRWF 0.03, 0.00, -3.23%) the Montreal printing solutions provider that is in bankruptcy proceedings in the U.S. and Canada. In a statement late on Tuesday, R.R. Donnelley said it was prepared to pay $750 million cash, the estimated $257 million of cash that would be on the balance sheet at June 30, and 30 million RRD shares valued at about $394 million. R.R. Donnelley said that for Quebecor World, its proposal is superior to the restructuring that Quebecor’s reorganization plans provide. The stock of a combined R.R. Donnelley-Quebecor World “will offer attractive investment characteristics for current creditors” of Quebecor World “when compared to the newly issued securities of a stand-alone reorganized company,” R.R. Donnelley said. The deal should add to earnings after the first year of combined operations, R.R. Donnelley said. R.R. Donnelley said it has sufficient cash on hand plus credit lines to finance the cash part of the deal. It said such a deal would be subject to antitrust clearance in the U.S. and Canada.
Is this a long-term solution or short-term band-aid? Granted Quebecor is in bankruptcy proceedings, thus this may be a bargain…
RR Donnelley bidding for Quebecor’s assets