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Industry Insight

R.R. Donnelley's Bid for Quebecor World


By Adam Dewitz
Published: June 9, 2009

R.R. Donnelley reveled in an SEC filling on June 8th that the company had delivered a revised non-binding proposal to Quebecor World regarding R.R. Donnelley's interest in the acquisition of all or substantially all of the assets and properties of Quebecor World. The revised proposal sweetens the deal for Quebecor World and its creditors by increasing its offer to "US$178,000,000 (US$100,000,000 plus an additional US$78,000,000 in cash on the balance sheet)." The letter also includes the handling of pensions, labor and tax issues. [Updated 6/9] Folio just published a story stating, "Quebecor World has effectively rejected R.R. Donnelley’s $1.825 billion offer to acquire the company" based on a document filed yesterday with the U.S. bankruptcy court (you can access the documents here). According to the report Quebecor World feels their successful reorganization provides a better deal for the company and its creditors.

[Updated 6/10] RR Donnelley has sent out a press release stating its proposal has expired:

“We are disappointed by the decision of Quebecor World to reject our June 8 proposal,” said Thomas J. Quinlan III, RR Donnelley’s President and Chief Executive Officer. “We believe that our proposal was undoubtedly in the best interests of creditors based on a comparison of the distributions under our proposal with the distributions under the proposed stand-alone plan of reorganization. We are particularly disappointed because of the efforts and concessions made by us to adapt our proposal in response to concerns that were communicated to us.”

“This would have been an excellent fit for RR Donnelley and the best opportunity for the Quebecor World creditors. However, given our view of the Quebecor World operations, a transaction ascribing a higher value to Quebecor World than we offered in our last proposal is simply not in the interests of RR Donnelley,” said Mr. Quinlan. “We look forward to continuing to pursue other strategic initiatives.”

Proposal to Acquire the Assets of Quebecor World Expires

On Friday Folio ran a story pointing out the problems R.R. Donnelley may face with the acquisition including antitrust and coming to agreement with Quebecor World's creditors. The revised proposal addresses the issues Folio outlined in the article.

Earlier last week Dead Tree Edition (the anonymous blog authored by a magazine manager) ran a Q&A on the Donnelley-Quebecor World Deal that starts out pointing I'm wrong about the antitrust trust issue by overlooking the gravure printing operations. If I remember correctly the Federal Trade Commission stepped in to stop Donnelley's acquisition of Meredith-Burda in 1990 over gravure printing operations.

PrintCAN reported over the weekend that based on Canadian trademark office filings Quebecor World may change its name to Novink. There has been speculation in the past that Quebecor Inc has pressured Quebecor World to change its name.



By Marc Fors on Jun 10, 2009

To be sure, more of the large gravure press operations will be concentrated in the hands of Donnelley if an acquisition of Quebecor is completed. But why do we keep talking of this supposed ‘monoploy by print process’? It makes no sense in this new age of limitless advertising options that has eclipsed the past reliance on newspaper inserts that were produced primarily by gravure , as they say, “back in the day”.

The anonymous blogger noted in the article, most likely understands that the handful extremely long run publications might be denied the marginal cost savings of gravure in the those circulation ranges. But there is no “monopoly-by -process” coming out of this merger, any more than there is an ink-jet monopoly appearing on the horizon to put a stranglehold on the direct marketing industry or a lenticular print monopoly emerging to fleece the promotional item marketplace.

We should all be talking more about the lack of substantial gravure re-investment in this country over the past 20 years and understand that the economics of print have changed forever and are no longer tied to process, or press width, or the holy-grail of increasingly larger forms that few publishers can close on time anyway. The discussions around Donnelley’s Meredith-Burda deal and the supposed impact on the gravure print markets are ancient history, false prophecy and have no relevance here at all.

Donnelley should be lauded for attempting to absorb and reclaim a print network that has failed through Quebecor’s decade-long record mismanagement and debt-market wizardry coming home to roost. If Donnelley can save any of these locations and the employee groups they represent Donnelley deserves what profit they can wring out of the deal over the long term.

It is going to be an integration of tough decisions, serious risk, and heavy-lifting. I don’t see anybody fighting Donnelley for the privilege.


By Michael J on Jun 10, 2009

I read a while ago that Taylor industries made a big investment in gravure to do printed electronics. I'm not positive I've got it right so it should be independently confirmed.

But it wouldn't surprise me. It's a privately owned company that is quietly running one of the most forward looking intelligent print enterprises I've ever seen.


By dan on Jun 10, 2009

donnelley will ruin the industry if given a monopoly situation


By Terry A. Tevis on Jun 10, 2009

The industry was $135BB in 1995 and it will hit $95BB this year if we are lucky. RRD/QW is the ideal fit for the industry. Takes out tired iron, gravure is dead except for packaging, and redundant SG&A savings can support EBITDA/Revenue ratios demanded by banks and those further savings passed on to very sick publishers. I was sorry to learn today that RRD deal was rejected by QW. Like the management and banks that led them to this point, another bad decision.The creditors will look back on this in two years as a mistake. We are not coming back from this recession like we did in 1992 and 2003. Those good days are past and consolidation is a key to solid earnings for those who remain.Marc had it right in his analysis as well.


By Eric Miller on Jun 11, 2009

I do not believe we have heard the last of this. This was too good for the creditors and too good for the Industry to simply have QW say no. I believe that Donnelley will petition the court to consider an offer from them. The court has a responsibility to see that the creditors receive the best possible outcome of the QW chapter 11. Unfortunately for the creditors the next Donnelley offer is not likely to be as good as the 2 that they already offered.


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