Nov. 9 -- RR Donnelley and Moore Wallace Incorporated today announced that they have signed a definitive agreement to create the world's premier full-service commercial printer with over $8 billion in annual revenues, a leading position in North America and approximately 50,000 employees worldwide. The combined company will provide customers with the industry's broadest array of high-quality, long- and short-run print products and solutions, from magazines, telephone directories, books, catalogs, inserts and financial documents, to billing statements, outsourced customer communications, highly personalized direct mail, premedia, print fulfillment, labels, collateral materials, forms and logistics services. The Boards of Directors of both companies have unanimously approved the agreement. The combined company will retain the RR Donnelley name and will be headquartered in Chicago. Upon closing of the transaction, Mark A. Angelson, Chief Executive Officer of Moore Wallace, will become CEO of the new RR Donnelley, succeeding William L. Davis, Chairman, President and CEO of RR Donnelley. Mr. Davis announced in July 2003 his intention to retire when a successor was identified. Longtime RR Donnelley Director Stephen M. Wolf is to become non-executive Chairman of the Board of the combined company. Under the terms of the transaction, Moore Wallace shareholders will receive RR Donnelley shares based on a fixed exchange ratio of 0.63 of a RR Donnelley share for each Moore Wallace share. This represents $17.66 in value per Moore Wallace share, or approximately $2.8 billion in total equity value, a premium of 16%, based on the closing stock prices of both companies on the New York Stock Exchange (NYSE) on Friday, November 7, 2003. RR Donnelley will assume approximately $900 million in Moore Wallace debt. The combined company will be traded on the NYSE under the ticker symbol DNY. Upon completion of the transaction, RR Donnelley and Moore Wallace shareholders will own, respectively, approximately 53% and 47% of the combined company. RR Donnelley is expected to maintain an investment grade credit rating and to maintain its annual dividend of $1.04 per share. RR Donnelley and Moore Wallace will contribute eight and seven directors, respectively, to the combined Board. The transaction is expected to be accretive to RR Donnelley's earnings in the first full year of operations, excluding the impact of transaction-related charges. In addition to significantly enhanced revenue opportunities, the combined company expects to generate cost savings of at least $100 million on an annualized basis in the first 12-24 months after the closing. These savings are anticipated to result from the elimination of duplicative administrative and infrastructure costs, reduction in procurement expenses, and asset rationalization. The combined company is also expected to generate substantial cash flow in the first year of consolidated operations. William L. Davis, Chairman, President and CEO of RR Donnelley, said, "Today's announcement is a tremendously positive step forward in the continued evolution and development of RR Donnelley. The transaction will place the new RR Donnelley among the Fortune 250. It is great news for our customers, our employees and our shareholders. I am especially pleased that Mark Angelson will be leading this company and look forward to a smooth transition." Mark A. Angelson, CEO of Moore Wallace, said, "This transaction is strategically and financially compelling, bringing together the industry's most established and highly regarded companies and the industry's most advanced technologies to create a dynamic new business platform. The combination will enable the new RR Donnelley to offer the world's leading companies a comprehensive suite of print and related products and solutions that will meet the demands of our growing customer base. Through this combination, the new RR Donnelley will serve leading global, national, regional and local customers and will provide every printing need a company of any size could require." Mr. Angelson continued, "With a broad base of highly profitable businesses and a strategic approach to managing our capital, the new RR Donnelley will generate substantial cash flow after servicing the dividend and making disciplined capital expenditures. We will continue our commitment to use that cash flow on an accretive basis." Stephen M. Wolf, a Director of RR Donnelley, said, "Together, these two storied companies will have the scale and financial strength to compete successfully well into the future. Mark is a highly respected and superb leader with a solid track record in delivering growth and shareholder value, while maintaining a strong focus on customer satisfaction. The Board and I believe that he is the right person to take the combined company forward and deliver on its promise to all of its constituencies. I very much look forward to working with him in the years ahead." Alfred C. Eckert III, Chairman of the Moore Wallace Board, said, "We have created considerable equity for our shareholders and the prospects are excellent for continuing to build significant value. I am enthusiastic about this transaction and its potential. I look forward to serving on the Board of the new RR Donnelley and to chairing its newly-created Executive Committee." The transaction is subject to approval by RR Donnelley stockholders and Moore Wallace shareholders, and Ontario court approval of a plan of arrangement, which will provide for the compulsory exchange of each outstanding share of Moore Wallace for 0.63 of a RR Donnelley share. In addition, the transaction is subject to anti-trust clearance and Investment Canada approval, and is expected to close in the first quarter of 2004. The transaction is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes. It is expected to be taxable to Canadian shareholders of Moore Wallace. Morgan Stanley provided mergers and acquisitions advice to RR Donnelley. Sidley Austin Brown & Wood LLP and Stikeman Elliott LLP provided legal counsel to RR Donnelley. Goldman, Sachs & Co. provided mergers and acquisitions advice to Moore Wallace. Sullivan & Cromwell LLP and Osler, Hoskin & Harcourt LLP provided legal counsel to Moore Wallace. ==== WTT will have more analysis, interviews and commentary on this news soon.