Less than a month after rejecting a $1.2 billion buyout offer from Stamford, Connecticut-based Cenveo Inc., Banta Corp. has agreed to be acquired by RR Donnelley & Sons for $1.3 billion or $36.50 per share after the special $16 per share dividend declared last month by Banta.

The agreement has been unanimously approved by the boards of directors of both companies and is expected to close in the first quarter of 2007, the companies said in a joint statement Wednesday. The announcement of the agreement between Banta and RR Donnelley comes one day after the offer from Cenveo, a maker of envelopes and provider of digital printing services, expired. Menasha, Wisconsin-based Banta rejected Cenveo’s proposal in early October, but did not rule out the possibility of a future sale or merger.

Chicago-based RR Donnelley said in the statement that its "all-cash" acquisition of Banta would allow it to expand its printing, digital imaging, content management and outsourcing platforms. "Our publishing, catalog and direct marketing customers, in particular, will benefit from combined resources that will allow us to craft even more innovative and responsive solutions," said John Paloian, RR Donnelley Group President, Publishing & Retail Services, in the statement. "From digital prepress capabilities through sophisticated logistics, our enhanced flexibility will allow us to address our customers’ needs more quickly for cost-effective and compelling communications."

In a company-wide e-mail sent Wednesday Banta CEO Stephanie Streeter said the deal will help Banta through challenging market conditions. "We have been operating in a challenging marketplace – both in the commercial printing and supply-chain management sector," she wrote. "While we have been making great progress to address those challenges, by joining with RR Donnelley, Banta will be part of a larger company with enhanced scale and global reach. When the acquisition is complete, we will become part of a company that has approximately $11 billion in annual revenues that is well positioned to effectively compete in our ever-changing industries."

Revenues Flat, Earnings Down

A printer of books, magazines, catalogs and direct marketing materials, and a provider of supply-chain management services, Banta last week reported third quarter revenues of $382 million, comparable to the $381 million reported in the third quarter of 2005. Its net earnings declined to $15.9 million from $21.7 million in the same period last year, primarily due to restructuring and asset impairment charges, and reduced pricing in both the company’s printing and supply-chain management sectors, the company said.

Banta reported revenue of $1.13 billion for the first nine months of the year, also flat when compared to last year’s revenue. The company’s earnings from continuing operations were $45.7 million, compared to $49.4 million in the first nine months of last year.

The company previously announced plans to eliminate 500 jobs, to consolidate its five printing divisions into two, and either sell or close five of its printing facilities that are not meeting profitability expectations or can be consolidated into other Banta operations.

Banta’s board last month approved the payment of a special cash dividend of $16 per share and to borrow money to the pay the dividend. The consolidation of its operations and special dividend were viewed by analysts as a means of boosting shareholder value in light of the Cenveo bid.

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