Donnelley to buy Canadian printer
NEW YORK (Reuters) -- U.S. printing services firm R.R. Donnelley says it will buy Moore Wallace, a Canadian commercial printer, for $2.8 billion, plus debt, in a deal to expand its product line.
Under the terms of the deal, Moore Wallace shareholders will receive 0.63 shares of Chicago-based R.R. Donnelley for each Moore Wallace share held.
This values Moore Wallace at $17.66 per share, a 16 percent premium to its $15.25 Friday closing price on the New York Stock Exchange, Donnelley said Sunday. Donnelley shares closed at $28.03 on Friday.
R.R. Donnelley will also assume $900 million in Moore Wallace debt.
Moore Wallace Chief Executive Mark Angleson will run the combined company. Earlier this year, R.R. Donnelly's Chairman and Chief Executive William Davis said he planned to retire once a successor was found. Longtime R.R. Donnelley director Stephen Wolf will become nonexecutive chairman of the combined company.
The deal will be accretive to earnings by an undisclosed amount for first year after closure, excluding the impact of transaction charges. R.R. Donnelley estimates there will be about $100 million in annual cost savings in first 12 to 24 months after the deal closes.
Cost savings will come from cutting duplicative administrative expenses and infrastructure, reducing procurement costs, and asset rationalization, the company said.
The combined company, which will keep the R.R. Donnelley name and be headquartered in Chicago, will have $8 billion in combined revenue and still pay its $1.04 per share annual dividend. It will print items such as magazines, telephone directories, books, catalogs, billing statements, and direct mail.
R.R. Donnelley shareholders will own 53 percent of the combined company, and Moore Wallace shareholders will own 47 percent.
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