Transcontinental buys former Quebecor World's Canadian assets from Quad/Graphics

The Canadian Press ~ The News
Send to a friend

Send this article to a friend.

Transcontinental

MONTREAL — Canada's largest commercial printer will get even larger after Transcontinental Inc. agreed to purchase the former domestic assets of Quebecor World acquired last year by Quad/Graphics.

Transcontinental, a Montreal-based media company and parent company of the Prince Albert Daily Herald, will also sell its Mexican printing operations and black and white book printing business, destined for U.S. export.

No value for the transaction was provided. However, Quad/Graphics said Transcontinental would assume pension and post-retirement obligations of about US$75 million.

The separate transactions have been approved by the board of directors of both companies and is set to close in the fall, subject to regulatory approvals in Canada and Mexico.

Transcontinental (TSX:TCL.A) will acquire all of Quad/Graphics Canadian operations excluding its Vancouver facility, which will be used to service the U.S. Pacific Northwest.

The facilities being transferred include six domestic printing plants and one premedia facility employing 1,500 people. Three plants are located in Ontario, two in Quebec, one in Alberta and one in Nova Scotia that are forecasted to generate about US$310 million in revenues in fiscal 2011. The Mexican assets, which employ 900 in three facilities are expected to generate C$67 million in revenues.

The book printing business represents about C$25 million in revenues.

Quad/Graphics purchased World Color Press Inc., formerly Quebecor World, in May 2010 for about US$1.4 billion.

“The acquisition of the Canadian assets of Quad/Graphics is in line with our strategy to build on our more traditional print assets and is key to maintain a solid business going forward given the competitive and industry dynamics,” stated Transcontinental CEO Francois Olivier.

He said it will allow the company to leverage more than $700 million in investments made over the last several years.

The transactions will generate at least $40 million in additional operating earnings (EBITDA) 12 to 24 months after the deals close.

Olivier said the print markets have suffered from overcapacity, intense competition, technological advances and the entry of U.S. players into Canada.

“These transactions will permit us to improve our capacity utilization rate and better equip us to face these new challenges,” he added.

Quad/Graphics chairman and CEO Joel Quadracci said the deal will help the Wisconsin-based printer to realize the high-growth potential in Mexico, where it already has operations.

“To drive growth in the highly competitive Canadian marketplace would have required a substantial capital investment. Overall, Mexico is a more-compelling long-term value creation opportunity for us compared to Canada, and through this acquisition we expect to achieve solid synergies and realize our platform, earnings and market-leadership objectives.”

Transcontinental is the largest printer in Canada and Mexico and the fourth-largest in North America and has 10,500 employees. It publishes consumer magazines and French-language educational resources, as well as community newspapers in Quebec and the Atlantic provinces.

It recently increased its dividend for the third time in 18 months it recorded its eighth consecutive quarter of higher adjusted operating profits.

The company has sold its U.S. direct marketing business and closed several printing plants after investing in modern facilities that print newspapers and commercial flyers.

It won a deal to print the Globe and Mail and recently signed a four-year deal with Canadian Tire (TSX:CTC) that will add about $30 million to $40 million in annual revenues.

— By Ross Marowits

Organizations: Quad/Graphics, Transcontinental Inc., Quebecor World TSX Prince Albert Daily Herald U.S. Pacific Northwest.The World Color Press Inc. Globe and Mail Canadian Tire

Geographic location: Canada, U.S., MONTREAL Quebec Mexico Vancouver Ontario Alberta Nova Scotia North America

  • 1
  • 2
  • 3
  • 4
  • 5

Thanks for voting!

Top of page

Comments

Comments