RR Donnelley Announces Intent to Create Three Independent Publicly Traded Companies

RR Donnelley & Sons Company announced that it intends to create three independent, publicly traded companies: one business focused on financial communications and data services; one business focused on publishing and retail-centric print services; and one business focused on customized multichannel communications management.
 
“Over the last decade, we have strengthened our business portfolio through a combination of organic growth and strategic acquisitions, developing new products and services, inventing fresh ways to serve customers, attracting additional talent and building information technology systems,” said Thomas J. Quinlan III, RR Donnelley’s president and CEO.
 
“We see a significant opportunity to unlock value by allowing these three businesses to pursue their own strategies and invest according to the unique dynamics of their respective industries. Each company will have the strategic focus, management resources and capital structure to enable it to strengthen its market position and pursue its growth opportunities, enhancing long-term value for stakeholders.”
 
The creation of these three independent businesses is expected to deliver the following strategic and financial benefits;
 
Strategic Benefits:
• Each business to focus on its distinct strategic priorities, driving opportunities to accelerate growth and enhance long-term value.
• Greater flexibility to execute tailored business strategies and compete in evolving markets.
• Even more focused brand strategy to support each business’s marketing plan.
 
Financial Benefits:
 
• Tailored capital structures reflective of each business’s financial and growth profiles.
• Better-optimized investment policies.
• Market recognition of standalone growth prospects and profitability.
• Enable investors’ valuations to reflect each business’s unique operating and financial dynamics.
Quinlan continued, “
 
“We recognize that parts of the current portfolio will be more successful pursuing different strategies, and that these particular businesses offer the scale, expertise, product and service mix and other resources to excel as standalone companies,” Quinlan continued. “Creating three independent companies will allow each to more quickly capitalize on opportunities created by continued technological innovation and globalization within the markets they serve.”
 
1. Financial Communications Services Company (FinancialCo)
 
FinancialCo will be a leading, financial communications services company serving both the investment and capital markets worldwide. With proprietary technology, extensive capabilities and deep subject matter expertise, FinancialCo will support its customers with content management, multichannel content distribution, data management and analytics, collaborative workflow and business reporting tools and translations services. FinancialCo’s one-stop-shop offering leverages a unique combination of technology, service and regulatory expertise built through the combination of RR Donnelley’s financial print business, Bowne Financial and EDGAR Online.
 
As a standalone company with trailing 12-month net sales for the period ended June 30, 2015 of approximately $1 billion, the company believes FinancialCo will be positioned to aggressively invest in leading technology and workflow tools to support its customer communications requirements in a growing and fast evolving marketplace and to generate strong margins and cash flow to capitalize on significant opportunities in content collaboration, data analytics and compliance/regulatory services.
 
2. Publishing and Retail-Centric Print Services Company (PRSCo)
 
PRSCo will prepare, produce and distribute periodicals, catalogs, inserts, books, office products and directories.
 
As a standalone company with trailing 12-month net sales for the period ended June 30, 2015 of approximately $3.5 billion, the company believes PRSCo will continue to expand its scope of print-related capabilities to better serve customers worldwide and will be well positioned for further value creation through continued cost restructuring and accretive acquisition opportunities. The company’s expertise, deep customer relationships and strong cash flow generation are expected to support both organic and acquisition opportunities.
 
3. Customized Multichannel Communications Management Company (CMCo)
 
CMCo will be a global, customized multichannel communications management provider that assists organizations around the world in creating, managing and executing their multichannel communications strategies. CMCo will offer customized digital and printed communications services, including direct mail, short-run commercial printing, statements, business process outsourcing, supply chain management, logistics, creative design, content management, forms, labels, packaging, kitting and fulfillment and more.
 
As a standalone company with trailing 12-month net sales for the period ended June 30, 2015 of approximately $7 billion and deep relationships with Fortune 1000 customers, the company believes there are clear growth opportunities for CMCo driven by increasing demand for customized multichannel communications and it is well positioned to capture these opportunities by offering integrated solutions that help customers better manage their brand execution, marketing and supply chain strategies. CMCo is expected to have capital flexibility to fund growth investments and develop additional capabilities.
 
The transaction is expected to take the form of a tax-free distribution to RR Donnelley shareholders of FinancialCo and PRSCo in two new, independent, publicly traded stocks. The company expects to complete the spinoffs prior to the end of 2016. Immediately following the completion of the transactions, existing RR Donnelley shareholders will own shares in all three companies.
 
The leadership, governance, corporate branding and other matters for each company are still being developed and the company will provide interim updates as appropriate.
 
The transactions are subject to customary conditions, including obtaining rulings from the Internal Revenue Service and/or tax opinions, execution of inter-company agreements and final approval by the company’s Board of Directors.