RR Donnelley to Acquire Courier Corp.; Agreement with Quad/Graphics Terminated

RR Donnelley & Sons (RRD) and Courier Corp. jointly announced that they have signed a definitive agreement by which RR Donnelley will acquire Courier Corp., a leader in digital printing, publishing and content management in the U.S. specializing in educational, religious and trade books. The agreement has been approved by each company’s Board of Directors.

Courier Corp. also announced that it has terminated its previously announced merger agreement with Quad/Graphics Inc. As previously announced, on Jan. 16, 2015, Courier entered into a definitive merger agreement with Quad/Graphics under which Quad/Graphics would acquire Courier in a cash and stock transaction with a total purchase price of $20.50 per share (valued at $260 million).

On Jan. 27, 2015, Courier announced that it had received a non-binding, unsolicited proposal from RR Donnelley to acquire Courier for $23.00 per share in cash and RR Donnelley common stock. On Jan. 28, 2015, Courier announced that its Board of Directors had determined that the RR Donnelley proposal was reasonably likely to result in a “Superior Proposal” as defined in the Quad/Graphics merger agreement.

Following discussions with RR Donnelley and consistent with its fiduciary duties, Courier’s Board of Directors, in consultation with its independent legal and financial advisors, carefully reviewed and considered the RR Donnelley proposal. In accordance with the Quad/Graphics merger agreement, Courier provided Quad/Graphics with the opportunity to match the RR Donnelley proposal. Quad/Graphics declined to make any new proposal and the Courier Board unanimously determined that the RR Donnelley proposal constituted a “Superior Proposal” as defined under the Quad/Graphics merger agreement.

In accordance with the Quad/Graphics merger agreement, simultaneous with termination of the agreement, Courier paid Quad/Graphics a $10 million termination fee. Under the terms of the RR Donnelley merger agreement, Courier will be reimbursed by RR Donnelley for the entire $10 million fee payment.

“After a careful evaluation process, the Courier Board determined that the RR Donnelley transaction provides superior value to Courier shareholders and important benefits to our customers and employees,” James F. Conway III, Courier’s chairman, president and CEO, stated.

Under the terms of the transaction, Courier’s shareholders will have the option to elect to receive either $23.00 in cash or 1.3756 RR Donnelley common shares for each outstanding share of Courier they own. Such elections are subject to pro ration so that a total of 8.0 million shares of RR Donnelley common stock will be issued in the merger. Based on the closing trading price of RR Donnelley’s common stock on the NASDAQ on Feb. 4, 2015, the merger consideration represents a mix of approximately 49% cash and 51% stock, and a total transaction value of approximately $261 million, plus the assumption of Courier’s net debt and payout of outstanding equity awards.

The acquisition is expected to be both deleveraging and accretive to RR Donnelley’s non-GAAP earnings per diluted share within 12 months following the closing of the transaction, which is expected to occur in the second half of 2015. The completion of the transaction is subject to customary closing conditions, including regulatory approval and approval of Courier’s shareholders.

“This combination represents the next chapter in two long-running success stories woven together by a similar set of core values and operational excellence,” said Thomas J. Quinlan III, RR Donnelley’s president and CEO. “Our two organizations have a longstanding history of offering industry-leading solutions to our customers. We look forward to working with Jim Conway and his team in continuing that tradition.”

“By adding our digital printing and content management capabilities to RR Donnelley’s current business, we will be even better positioned to meet our collective customers’ needs,” Conway added. “Our customers can also continue to count on the same level of exceptional service, and our employees will benefit from greater opportunities for professional growth and development. We are excited by the opportunities created by this combination and look forward to working with RR Donnelley to fulfill them.”