Quad Completes Acquisition of Transcontinental’s Mexican Assets
Acquisition strengthens Quad/Graphics’presence in Mexico and ability to offer clients advanced print-production capabilities for driving their top-line growth
SUSSEX, WISCONSIN, September 8, 2011 – Quad/Graphics Inc. (NYSE: QUAD) is pleased to announce that it has completed the acquisition of the Mexican assets of Transcontinental Inc. (TSX: TCL.A, TCL.B, TCL.PR.D) following final approval of all required regulatory authorities, including the Mexican Federal Law on Economic Competition.
“We’re pleased to advance our interests in Mexico and become the country’s leading printer of magazines, retail inserts, catalogs, books and directories,” said Joel Quadracci, Quad/Graphics Chairman, President & CEO. “This acquisition supports our strategy to grow profitably in geographies and segments where we can be a market leader through a diverse product offering, and a superior and efficient operating platform. Mexico is a logical place to put down stronger roots. With publishers and marketers - both in Mexico and other parts of the world - eager to reach this emerging market’s large and growing population, we have the talent, technology and innovative solutions to help them achieve their business goals through the power of print.”
Quad/Graphics now has operations in five Mexican cities: Toluca, Querétaro, Azcapotzalco, Xochimilco and Tlalnepantla. Year 2011 proforma revenues for the combined company are forecasted to be approximately $115 million.
“Finalizing this deal represents a significant step toward realizing our goal of creating the most efficient, productive and integrated printing platform in Latin America,” said Tony Scaringi, President & General Manager of Latin America. “With facilities in Mexico, Argentina, Brazil, Chile, Colombia and Peru, we are better positioned than any other printer to deliver value throughout Latin America.”
Quad/Graphics’ leadership team in Mexico includes Roberto Sierra, General Manager of Mexico, and Martin Vallebona, General Manager of Querétaro. Sierra, who comes to the Company from Transcontinental, is responsible for operations at the Company’s magazine, catalog and retail insert facilities in Toluca, Azcapotzalco, Tlalnepantla and Xochimilco. Vallebona continues in his role as General Manager of Querétaro, a book manufacturing facility. “I am energized by the experience and knowledge these two professionals bring to our team,” Scaringi said.
As the Company begins its integration, it will break ground on a building expansion for paper roll and work-in-process storage at its Toluca facility. Once complete, the approximately 900-square-meter (10,000-square-foot) expansion will enable the Company to install additional press and finishing equipment.
Simultaneous with the closing of this acquisition, Quad/Graphics has also acquired the portion of Transcontinental’s black-and-white and two-color book printing business destined for U.S. export. The work will be absorbed into Quad/Graphics’ existing network of book printing plants.
Quad/Graphics’ intent to acquire Transcontinental’s Mexican assets and a portion of its book printing business was announced on July 13, 2011, as part of a definitive agreement that also included Quad/Graphics selling its Canadian operations (with the exception of Quad/Graphics’ Vancouver, B.C., facility) to Transcontinental. Transcontinental’s acquisition of Quad/Graphics’ Canadian operations is still awaiting final regulatory approval. Transcontinental was informed by the Competition Bureau of Canada that it requires additional information in order to complete its review of the proposed transaction. Under the Competition Act, the period during which the parties may not complete the transaction has been extended until 30 days after providing the Competition Bureau with the additional information it has requested. Both parties have been cooperating with the Competition Bureau since the announcement of the transaction, and they expect to be able to comply with the request for additional information in a timely manner. Given the scope and complexity of the parties’ businesses, the issuance of a request for additional information is not unusual.
Quad/Graphics (NYSE: QUAD) is a global provider of print and related multichannel solutions for consumer magazines, special interest publications, catalogs, retail inserts/circulars, direct mail, books, directories, and commercial and specialty products, including in-store signage. Headquartered in Sussex, Wis. (just west of Milwaukee), the Company has approximately 24,000 full-time equivalent employees working from more than 60 print-production facilities as well as other support locations throughout the United States, Canada, Latin America and Europe. As a printing industry innovator, Quad/Graphics (www.QG.com) is redefining the power of print in today’s multimedia world by helping its clients use print as the foundation of multichannel communications strategies to drive their top-line revenues.
Notes Regarding Quad/Graphics Inc. Forward-Looking Statements
To the extent any statements made in this press release contain information that is not historical, these statements are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relate to, among other things, Quad/Graphics’ objectives, goals, strategies, beliefs, intentions, plans, estimates, prospects, projections and outlook, and can generally be identified by the use of words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “plan,” “foresee,” “believe,” or “continue,” or the negatives of these terms, variations on them and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements.
These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond the control of Quad/Graphics. These risks, uncertainties and other factors could cause actual results to differ materially from those expressed or implied by those forward-looking statements. Among such risks, uncertainties and other factors that may impact Quad/Graphics are: the impact of significant overcapacity in the commercial printing industry, which creates downward pricing pressure and fluctuating demand for printing services; the impact of fluctuations in costs and availability of raw materials, energy costs and freight rates; Quad/Graphics may be unable to achieve the estimated potential synergies expected from the completed acquisition of Worldcolor or it may take longer or cost more than expected to achieve those synergy savings; unexpected costs or liabilities related to the acquisition, including the effects of purchase accounting that may be different from Quad/Graphics’ allocations; failure to successfully integrate the operations of Quad/Graphics and Worldcolor; the impact of electronic media and similar technological changes; changes in macroeconomic or political conditions in the countries where Quad/Graphics operates; regulatory matters and risks; legislative developments or changes in laws; the impact of fluctuations in interest rates and foreign exchange rates; the retention of existing, and continued attraction of additional, key employees; and the effect of accounting pronouncements issued periodically by standard-setting bodies.
Quad/Graphics cautions that the foregoing list of risks, uncertainties and other factors is not exhaustive and you should carefully consider the other factors detailed from time to time in Quad/Graphics’ filings with the United States Securities and Exchange Commission and other uncertainties and potential events when relying on the Company’s forward-looking statements to make decisions with respect to Quad/Graphics.
Because forward-looking statements are subject to assumptions and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. You are cautioned not to place undue reliance on such statements, which speak only as of the date of this press release. Except to the extent required by the federal securities laws, Quad/Graphics undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Claire Ho, Director of Corporate Communications, Quad/Graphics (U.S.)
Investor Relations Contact:
Barb Bolens, Assistant Treasurer and Director of Investor Relations, Quad/Graphics (U.S.)