TORONTO -- The proposed new head of printing giant RR Donnelley, which is offering $3.7 billion US in stock and assumed debt to buy Moore Wallace, said yesterday there will be some rationalization but it's too soon to say if any factories will be closed. "We'll obviously be taking a look at it," said Moore Wallace chief executive Mark Angelson, who will be chief executive of the merged company, succeeding Donnelley's William Davis, who is retiring.
RR Donnelley and Moore Wallace have had little overlap in the products and services they provide but the two companies have served many of the same clients, he said.
"We do have overlap in some areas in direct mail and commercial and there are two corporate offices. There is only going to be one -- it's going to be in Chicago -- but aside from that, it's just too soon to know."
Angelson said Donnelley hopes to save at least $100 million annually in its takeover of Moore Wallace through the elimination of duplicate administrative and infrastructure costs, procurement and asset rationalization and optimization.
The merged company will have revenue of about $8 billion US.
Chicago-based RR Donnelley said it is paying $2.8 billion US in stock, plus assuming about $900 million US of Moore Wallace debt to take over the company formerly known as Moore Corp. If successful, the acquisition would vault the merged company ahead of Quebecor World, the Montreal-based commercial printer that is part of the Quebecor (TSX:QBR.B) multimedia group.
Moore Wallace shareholders would receive 0.63 of an RR Donnelley share for each Moore Wallace share. The deal values Toronto-based Moore Wallace at $17.66 US a share, a 16-per-cent premium for the company, whose shares closed at $15.25 US Friday on the New York Stock Exchange.
Angelson said the company will apply to keep its listing on the Toronto Stock Exchange.
The transaction is subject to approval by RR Donnelley stockholders and Moore Wallace shareholders, and Ontario court approval of a plan of arrangement. It's also subject to antitrust clearance and Investment Canada approval. The deal is expected to close in the first quarter next year.
Donnelley is one of the world's largest printing companies. It employs 30,000 employees worldwide and prints magazines such as Reader's Digest, catalogues and advertising supplements and books, including the best-selling Harry Potter novels.
THE TAKEOVER
Offer: Moore Wallace shareholders to receive 0.63 share of RR Donnelley for each share they hold. Donnelley also assumes $900 million US of Moore Wallace debt. Total value about $3.7 billion US.
Ownership: About 53 per cent of stock in merged company will be owned by Donnelley shareholders, 47 per cent Moore Wallace shareholders. Board of directors will have eight directors from Donnelley, seven from Moore Wallace.
Finances: Merged firm would have combined 2003 annual revenues of $8 billion US, $1 billion US in operating earnings and about $1.9 billion US in debt.
Headquarters: Chicago.
Closing date: Expected to close first quarter of 2004.
