R.R. Donnelley Bids To Acquire Quebecor World for $1.3 Billion

Proposal comes as Quebecor reorganizes, to emerge from bankruptcy protection.

By Jason Fell
Monday, June 1, 2009

Chicago-based R.R. Donnelley has approached fellow magazine printer Quebecor World—which expects to emerge from bankruptcy protection this summer—about acquiring the assets of the company for approximately $1.3 billion.

“Quebecor and R.R. Donnelley have long represented a strong strategic fit with one another and, through this proposal, we have the opportunity to join them together in a way that greatly benefits stakeholders of both companies, including Quebecor World’s debtors and their creditors,” R.R. Donnelley president and CEO Thomas J. Quinlan III said in a statement.

It was not immediately clear if a merger of this size would conflict with antitrust regulations. A Quebecor World spokesperson acknowledged receipt of the letter and said its board of directors was in the process of reviewing the proposal with major stakeholders.

According to the proposal, R.R. Donnelley has offered to purchase Quebecor’s assets in three parts: Approximately $700 million cash to Quebecor’s debtors; $257 million in cash on Quebecor’s balance sheet; and $394.2 million in stock—representing approximately 15 percent of Donnelley’s outstanding shares. Donnelley said its proposal was based on Quebecor’s estimated value following its court-ordered reorganization.

In April, Quebecor World reached an agreement with its creditors that it said will allow the company to emerge from bankruptcy protection, possibly as early as mid-July. The agreement is based on the terms of a consolidated restructuring plan that is intended to recapitalize and “substantially deleverage” the company from its pre-filing levels.

In connection with the restructuring, Quebecor said it anticipates having to arrange exit financing at levels below its current debtor-in-possession financing facility, the company said.

Quebecor filed for bankruptcy protection in January 2008. In March, Quebecor reported a net loss from continuing operations of $943.9 million for 2008 compared to a net loss from continuing operations of $1.8 billion in 2007. The results included $165.9 million in taxes.