Yesterday, R.R. Donnelly, the Chicago-based printer, sent a letter to Quebecor World indicating its interest in acquiring the mega-printer for approximately $1.3 billion. It’s unclear whether or not Donnelley’s overture is hostile, nor is it clear whether or not a deal of this size would raise the ire of antitrust regulators (I’m thinking it might).

Here’s the letter in full:

May 12, 2009

Jacques Mallette
President and Chief Executive Officer
Quebecor World Inc.
999 de Maisonneuve West
Suite 1100
Montréal, Province of Québec
H3A 3L4

David McCarthy

Quebecor World (USA) Inc.
150 East 42nd Street
New York, NY 10034

Steven Strom
Managing Director

Jefferies & Company, Inc.

520 Madison Avenue, 10th Floor

New York, NY 10022

Re: Purchase of All or Substantially All of the Assets of the U.S. and Canadian Debtors

Ladies and Gentlemen:

As you know, on August 11, 2008 we expressed to you in writing our
interest in acquiring a significant portion of the assets and
businesses of Quebecor World. We subsequently further indicated our
interest in pursuing a transaction in conversations with various
people, including Mr. Randy Benson, Chief Restructuring Officer of
Quebecor World Inc. (“QWI”), Mr. Andy Kramer of UBS, and Mr. Eric
Korsten of Jefferies & Company, Inc. Although we have not received
any response to our previous proposal, we have continued to follow the
publicly-available information concerning your reorganization

We recently reviewed the draft First Amended Plan of Reorganization
proposed with respect to the U.S. bankruptcy proceeding and the draft
Plan of Reorganization and Compromise proposed with respect to the
Canadian reorganization of QWI. We refer to these documents as the
"Plans", and to QWI, Quebecor World (USA) Inc. and their debtor
affiliates as the "Quebecor Debtors".

After reviewing the draft Plans in light of our own valuation of the
relevant companies as stand-alone businesses, we believe that the
proposed transaction set out in this letter is superior for the
Quebecor Debtors and their creditors to the restructuring proposed by
the Plans in their current form. Accordingly, R.R. Donnelley & Sons
Company (“RRD”) is pleased to submit to you a preliminary indication of
interest to purchase all or substantially all of the assets and
properties of the Quebecor Debtors (including shares of their Latin
American subsidiaries), free and clear of all claims and interests, on
the terms and conditions described below (the “Acquisition”). RRD is
ready to proceed as quickly as possible to reducing its proposal to a
legally-binding asset purchase agreement for implementation in a
court-approved sale pursuant to Section 363(b) under the U.S.
Bankruptcy Code and accompanying proceedings under the Companies’
Creditors Arrangement Act ("CCAA"). We would be willing to consummate
the Acquisition prior to or in connection with plan confirmation, as
you consider in the best interests of the Quebecor Debtors and their

We understand and appreciate the time and effort that have gone into
preparing the Plans, but we only learned of the Plans’ terms upon
publication and, in light of those terms, we would like to submit
another approach for your consideration as you weigh the options
available to you to propose the best possible plan of reorganization
for the Quebecor Debtors and their creditors.


The key provisions of our proposal are as follows:

(a) Purchase Consideration. We propose to pay the Quebecor Debtors (in the aggregate):
cash in an amount equal to the cash amount contemplated for
distribution under the draft Plans, which we believe is approximately
US$700,000,000; plus
cash on balance sheet (estimated as of June 30, 2009, at $257,000,000 pursuant to the Plans); plus
30 million shares of RRD common stock, which represent approximately
15% of RRD’s outstanding shares and have a value of US$394,200,000
based on the closing trading price on May 11, 2009. RRD common stock is
listed for trading on the New York Stock Exchange, and the current
market capitalization of RRD is approximately US$2.7 billion.

We believe that the publicly-listed common stock of the pro forma
combined company will offer attractive investment characteristics for
current creditors of the Quebecor Debtors when compared to the
newly-issued securities of a stand-alone reorganized company. In
addition to providing an attractive valuation today and immediate
liquidity, for those investors that choose to remain stockholders of
RRD, our proposal offers the opportunity to enjoy the synergies
involved in the Acquisition and participate in any future appreciation
of RRD stock as we grow our business around the world. This is an
exciting opportunity and we expect that the Acquisition will be
accretive to RRD stockholders after the first 12 months of combined

(b) Valuation Assumptions. Our proposed acquisition price is based on
publicly-available information and our deep knowledge of the industry.
We have assumed (i) interim operations in the ordinary course, (ii)
normalized working capital at closing, (iii) the assets and properties
of the Quebecor Debtors (and their Latin American subsidiaries) are
consistent with our business expectations based on our industry
knowledge and our review of public financial information, (iv) the
non-debtor subsidiaries are free of liabilities outside of the ordinary
course of business, and (v) the assets and properties of the Quebecor
Debtors will be transferred to us free and clear of all claims and
liabilities (other than ordinary course trade payables, specific
contracts that we ask you to assume and assign to us, and other
liabilities to be agreed).

(c) Financing. There would be no financing condition to the
Acquisition. We have sufficient funds to pay the cash portion of the
consideration from cash on hand and/or availability under our existing
revolving credit facility.

(d) Internal Approvals. This proposal has been reviewed at the highest
levels of RRD and we are pleased to advise you that the only further
internal approval necessary for the execution and delivery of a binding
asset purchase agreement is the approval of our Board of Directors. No
shareholder approval is required.

(e) Due Diligence. We are prepared to work with you and our respective
advisors to proceed as expeditiously as possible to complete our
business, financial, accounting, tax, environmental and legal due
diligence review, including meetings with QWI’s management, and the
reasonable opportunity to inspect QWI’s facilities. With access to the
right data and personnel, we are confident that this work could be
completed without material delay.

(f) Regulatory Matters. The Acquisition will require expiration of the
applicable waiting period under the U.S. Hart-Scott-Rodino Act and
under the Competition Act Canada, if applicable, approval under the
Investment Canada Act and, potentially, filings in other jurisdictions.
We and our advisors have done considerable work assessing the
regulatory issues associated with the proposed Acquisition and are
confident that the proposed Acquisition can be completed in a timely

(g) Competitively Sensitive Information. We are sensitive to any
concerns that you may have with respect to the treatment of
competitively sensitive information during the due diligence process.
One of the first conversations that we would like to suggest take place
would be between your antitrust counsel and our antitrust counsel at
Sullivan & Cromwell LLP and Osler, Hoskin & Harcourt LLP. Our
advisors are very familiar with the issues relating to conducting
diligence for potential strategic transactions in this industry and can
describe to you the set of safeguards that we would implement to avoid
any risk that information is shared inappropriately.

(h) Structure and Documentation. The purchaser would be one or more
wholly-owned subsidiaries of RRD. There would be no other investors or
sources of capital or financing for the Acquisition. We would expect
the transaction to be documented in a customary asset purchase
agreement, with an agreed form of bidding procedures, contract
procedures and sale order for the U.S. proceeding, and appropriate
equivalent Canadian documents and proceedings relating to the CCAA. The
asset purchase agreement would be effective upon court approval and
would include customary representations, warranties, covenants and
closing conditions and other terms customary for similar transactions.
Following due diligence, we are interested in exploring alternative
structures in order to achieve the most tax efficient transaction for
the parties.

(i) Stalking Horse Protections. We do not require any exclusivity
period, no-shop provisions or expense reimbursement to conduct due
diligence or finalize the terms of the proposed Acquisition. However,
once we execute a definitive asset purchase agreement, we will require
customary protections for a stalking horse bidder in light of the value
created for the Quebecor Debtors by our offer, including overbid
protections and other bidding procedures to be agreed, milestones to
closing and a termination right if the milestones are not met, expense
reimbursement, and, in the event the Quebecor Debtors consummate an
alternative transaction, a break-up fee in an amount to be agreed.


We would like to suggest that you immediately identify a working group
at the Quebecor Debtors that can work with us and our advisors,
Sullivan & Cromwell LLP, and Osler, Hoskin & Harcourt LLP, to
conduct the due diligence process and finalize the terms of the
definitive asset purchase agreement. As mentioned above, prior to
signing a definitive asset purchase agreement, we require no expense
reimbursement and no deal protection of any sort. We understand that
the Quebecor Debtors would be free to abandon discussions with us at
any time (and vice versa), and we believe that we can progress very
quickly to agree upon a transaction without materially impairing your
ability to solicit approval of the current draft Plans later if for any
reason you decide not to proceed with a transaction with RRD. We stand
ready to execute a customary confidentiality agreement upon request.

About RR Donnelley
RRD is a full-service provider of print and related services, including
business process outsourcing. RRD provides the industry’s broadest
product and service line, including solutions in commercial printing,
direct mail, financial printing, print fulfillment, labels, forms,
logistics, call centers, transactional print-and-mail, print
management, online services, digital photography, color services, and
content and database management to customers in the publishing,
healthcare, advertising, retail, technology, financial services and
many other industries. RRD’s broad product and service mix enable the
company to provide end-to-end services to customers in virtually every
business, education, government, and non-profit sector.

RRD has operations on four continents to provide exceptional service to
leading global organizations. Its agile fleet of digital printing
devices includes more than 1,000 proprietary and commercially-available
units across more than 60 facilities worldwide.

Through its leading proprietary eCommerce systems it provides customers
a comprehensive array of print management, premedia, and other
services. RRD’s development pipeline continues to deliver innovations,
such as the world’s first 1200 dpi 4-color inkjet press and the
company’s recent announcement of a breakthrough that will bring
lithographic economics, flexibility, and performance to variable

Its logistics capabilities include services that help it effectively
deliver customers’ mail deep into the postal stream, handle complex
rollouts of retail signage and point of sale materials, fulfill direct
mailings that incorporate personalized URLs, and provide customers
online access to tracking information.

Since 2004, RR Donnelley has completed acquisitions and asset purchases in Latin America, North America, Europe and Asia.

We believe that we are uniquely qualified to assess and complete the
Acquisition given our experience in financing and executing major
transactions in the printing industry. We have a proven track record of
successful execution of complex, structured transactions, providing you
with a high degree of certainty that we can consummate the Acquisition
in a timely and efficient manner.

* * * *

This letter is not a legally-binding offer or agreement. Any
legally-binding offer or agreement will be set forth only in definitive
documentation approved by you and us.

If you have questions about our letter or would like to discuss the
next steps, please do not hesitate to contact me. You also may contact
Stefan Selig of Banc of America Securities/Merrill Lynch & Co.
(REDACTED), or Andy Dietderich at
Sullivan & Cromwell LLP (REDACTED).

In connection with our own disclosure obligations we will be publicly
disclosing this letter by filing it with the US Securities and Exchange
Commission. We also understand and appreciate that you will want to
share this letter with the many stakeholders in your restructuring

We are very excited about the possibility of this transaction and look forward to taking the next steps with you.

Very truly yours,


By /s/ Thomas J. Quinlan III

Name: Thomas J. Quinlan III

Title: President and Chief Executive Officer

cc: Louis J. Gouin

(Ogilvy Renault LLP)

Michael J. Canning, Esq.

Neil M. Goodman, Esq.

Joel M. Gross, Esq.
(Arnold & Porter LLP)

Murray A. McDonald
(Ernst & Young Inc)

S. Richard Orzy

Kevin J. Zych
(Bennett Jones LLP)

Ira S. Dizengoff

David H. Botter

Ryan Jacobs
David Staber

Sarah Schultz

(Akin Gump Strauss Hauer & Feld LLP)

Audra D. Cohen
Andrew G. Dietderich

(Sullivan & Cromwell LLP)

Edward Sellers

Randall Pratt

(Osler, Hoskin & Harcourt LLP)

Stefan Selig

(Banc of America Securities/Merrill Lynch & Co.)

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