RR Donnelley, the Chicago-based printer and integrated communications provider, has agreed to acquire Consolidated Graphics, a general commercial printing company, for more than $600 million.
Consolidated Graphics shareholders will receive $34.44 in cash and 1.651 shares of RR Donnelley for each outstanding share of Consolidated Graphics, or $62 per share based on RR Donnelley’s closing share price as of October 23. Total transaction value will be approximately $620 million, plus the assumption of an undisclosed amount of debt.
"Consolidated Graphics is an exceptional fit with RR Donnelley," Thomas J. Quinlan III, president and CEO of RR Donnelley, says in a statement. "This strategic combination will complement the RR Donnelley platform and further enhance our ability to provide integrated communications solutions for our valued clients across all industry verticals."
Joe R. Davis, chairman and CEO of Consolidated Graphics adds: "Our customers will benefit significantly from RR Donnelley’s broad range of printing capabilities and our combined geographic footprint. RR Donnelley’s customers will benefit from the planned adoption of Consolidated Graphics’ local service model for all of its commercial printing group."
The deal has been unanimously approved by both boards of Directors and is expected to close in the first quarter of 2014.
Organic Growth in Q3
In a separate announcement, RR Donnelley released preliminary third-quarter results.
The company posted revenue of $2.61 billion for 2.2 percent organic growth. Net cash provided by operating activities was $249 million.
"We are very pleased with our third-quarter performance and the continuation of the positive operational trends we experienced for the past four quarters," Quinlan says in a separate statement. "We expect strong cash flow in the quarter that enables us to migrate toward our targeted gross leverage range of 2.25x to 2.75x on a long-term sustainable basis."