RR Donnelley’s Quebecor Offer Expires
Move to buy bankrupt Canadian printer/advertiser is rebuffed over sale price differential.
June 11, 2009
RR Donnelley & Sons Co., the listed, Illinois-based printer and advertising company saw its offer to buy Quebecor World, a Montreal-based, bankrupt smaller player rebuffed after the target’s management deemed its offer too low.
RR Donnelley offered in May to Quebecor World $1.35 billion cash-and-stock deal to buy the bankrupt printer, and later increased that offer to $1.5 billion. The next step in the target's restructuring is unclear.
A CJS Securities analysis posted at Thomson Analytics indicated that the target did not fully explain why it decided to reject RR Donnelley’s proposal. At a time when the federal government has allowed mergers in other sectors to be hastily executed to preserve jobs, companies and shareholder investments, the CJS report suggested that concern over federal intervention could have played a role in dealmakers’ decision processes.
“While the wording appears to be a rejection, upon closer examination, there is noticeable omission of an actual rejection,” the report stated. “Given the vague language and the lack of an absolute rejection, we can only speculate that the camps are divided in opinion. While there is likely to be a full anti-trust review and we fully believe it to be a thorough one, there are several reason and precedents why it is likely to be approved by the government agencies that would be involved.”
Quebecor World and RR Donnelley did not respond to requests for comment.
The report pointed out that the merger of the companies would garner no more of 15% of the US printing industry, even when excluding newspapers.
Thomas Quinlan, RR Donnelley’s chief executive and president, said the deal that was offered to Quebecor was “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.”
Quinlan indicated that, after already sweetening its offer, RR Donnelley would not offer a new bid for Quebecor World and that the company will pursue new strategies.
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