On Oct. 24, 2013, R. R. Donnelley & Sons Company and Consolidated Graphics, Inc. jointly announced that RR Donnelley will acquire Consolidated Graphics for approximately $620 million, plus the assumption of Consolidated Graphics' net debt.
Consolidated Graphics’ annual sales ending March 2013 were $1,048.2 million. RR Donnelley’s 2012 net sales were $10,221.9 million. According to Printing Impressions 2012 Top 400 list of U.S. and Canadian printers, RR Donnelley is the largest printer, and Consolidated Graphics is the seventh largest.
Under the terms of the transaction, which has been unanimously approved by each company's Board of Directors, Consolidated Graphics shareholders will receive a combination of $34.44 in cash and a fixed exchange ratio of 1.651 RR Donnelley shares for each outstanding share of Consolidated Graphics they own, or $62 per share based on RR Donnelley's closing share price on Oct. 23.
"Consolidated Graphics is an exceptional fit with RR Donnelley and we are delighted to welcome them to our organization," said Thomas J. Quinlan III, RR Donnelley's president and CEO.
Consolidated Graphics is an interesting company. Founded in 1985 when Davis acquired Western Lithograph, a Houston printer, Consolidated Graphics has been aggressive in its pursuit of printers, having acquired approximately 70 commercial printing companies over the years, including industry leaders such as Anderson, Frederick Printing and Jarvis Press. The company has locations in 26 states, as well as Toronto, Prague and Japan.
Consolidated Graphics is also one of the largest digital printing operations, according to the company, with seven facilities producing large and grand format printing. For example, in May 2012, the company purchased 10 HP Indigo 10000 Digital Presses, giving it more than 250 digital presses. Digital printing is 19% of the company’s sales. The company also has large operations in packaging and direct mail.
This acquisition is of great interest to the ink industry for a number of reasons, and not just because of the impact it will likely have on sales of specific companies. This shows that mergers and acquisitions among the customer base are not over yet, which may ultimately signal consolidation within the printing industry’s supplier base. It also shows the impact of digital technologies on commercial printing.
The completion of the transaction, which is subject to customary closing conditions, including regulatory approval and approval of Consolidated Graphics' shareholders, is expected to occur in the first quarter of 2014. Joe R. Davis, Consolidated Graphics' chairman and CEO, holds approximately 16.5% of Consolidated Graphics' outstanding shares.
"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," said Davis.