TORONTO, Jan 26 (Reuters) - U.S. commercial printing company Quad/Graphics Inc said on Tuesday it will acquire Canadian rival World Color Press (WC.TO) as it pushes to expand its magazine and catalog printing business as well as its geographic presence.
Montreal-based World Color, formerly known as Quebecor World, was founded more than a century ago and prints magazines such as Sports Illustrated, US Weekly, Reader's Digest and Rolling Stone.
The two companies did not announce the deal's value, but the transaction is expected to be worth between $1.3 billion and $1.4 billion, according to a source familiar with the deal.
The agreement would create the second-largest commercial printer in North America, behind R.R. Donnelley & Sons Co (RRD.O).
"This transaction allows us to expand our geographic scope by entering the Canadian marketplace and certain Latin American markets where we currently do not have a presence," Quad/Graphics' Chief Executive Joel Quadracci said in a statement.
World Color has sizable catalog, directory, retail insert and book printing segments. It operates in the United States, Canada, Argentina, Brazil, Chile, Colombia, Mexico and Peru.
Its predecessor company, Quebecor World, filed for bankruptcy protection in January 2008 and emerged from bankruptcy in mid-2009 under the name World Color Press.
Early in 2009, R.R. Donnelley & Sons offered to buy Quebecor World for about $1.5 billion in cash and stock, but the offer was rejected. [ID:nN10338012] [ID:nLN597652]
QUAD/GRAPHICS GOING PUBLIC
Privately held Quad/Graphics said that concurrent with the closing of the deal, it intends to become a publicly traded company.
Once the deal is complete, Quad/Graphics' shareholders will hold about 60 percent of the combined entity's shares, while World Color shareholders will own the remainder of the new company.
The combined entity, which will have nearly 30,000 employees worldwide, is expected to generate annual revenues of more than $5 billion. Quad/Graphics estimates the combined company will also generate about $225 million in annualized savings within 24 months of closing.
The deal is expected to close in the summer of 2010, subject to shareholder and regulatory approvals, the two companies said in a joint statement.
Quad/Graphics said the deal is not contingent on financing and that it has $1.2 billion of committed financing from JPMorgan Chase and U.S. Bank.
As of Sept. 30, the two companies had a combined unaudited debt balance of about $1.7 billion.
Under the terms of the deal, each World Color common share outstanding at closing will be converted after a multi-step process into a number of Class A common shares of Quad/Graphics at a share exchange ratio to be determined at closing.
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