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RR Donnelley and Moore Wallace Agree to Combine
Moore Wallace CEO Mark A. Angelson To Lead the New RR Donnelley
CHICAGO, TORONTO and NEW YORK, Nov. 9 /PRNewswire-FirstCall/ -- RR Donnelley
and Moore Wallace Incorporated (NYSE: MWI; TSX: MWI) today announced that they
have signed a definitive agreement to create the world's premier full-service
commercial printer with over $8 billion in annual revenues, a leading position
in North America and approximately 50,000 employees worldwide. The combined
company will provide customers with the industry's broadest array of
high-quality, long- and short-run print products and solutions, from magazines,
telephone directories, books, catalogs, inserts and financial documents, to
billing statements, outsourced customer communications, highly personalized
direct mail, premedia, print fulfillment, labels, collateral materials, forms
and logistics services. The Boards of Directors of both companies have
unanimously approved the agreement.
The combined company will retain the RR Donnelley name and will be headquartered
in Chicago. Upon closing of the transaction, Mark A. Angelson, Chief Executive
Officer of Moore Wallace, will become CEO of the new RR Donnelley, succeeding
William L. Davis, Chairman, President and CEO of RR Donnelley. Mr. Davis
announced in July 2003 his intention to retire when a successor was identified.
Longtime RR Donnelley Director Stephen M. Wolf is to become non-executive
Chairman of the Board of the combined company.
Under the terms of the transaction, Moore Wallace shareholders will receive RR
Donnelley shares based on a fixed exchange ratio of 0.63 of a RR Donnelley share
for each Moore Wallace share. This represents $US17.66 in value per Moore
Wallace share, or approximately $2.8 billion in total equity value, a premium of
16%, based on the closing stock prices of both companies on the New York Stock
Exchange (NYSE) on Friday, November 7, 2003. RR Donnelley will assume
approximately $900 million in Moore Wallace debt.
The combined company will be traded on the NYSE under the ticker symbol DNY.
Upon completion of the transaction, RR Donnelley and Moore Wallace shareholders
will own, respectively, approximately 53% and 47% of the combined company. RR
Donnelley is expected to maintain an investment grade credit rating and to
maintain its annual dividend of $1.04 per share. RR Donnelley and Moore Wallace
will contribute eight and seven directors, respectively, to the combined Board.
The transaction is expected to be accretive to RR Donnelley's earnings in the
first full year of operations, excluding the impact of transaction-related
charges. In addition to significantly enhanced revenue opportunities, the
combined company expects to generate cost savings of at least $100 million on an
annualized basis in the first 12-24 months after the closing. These savings are
anticipated to result from the elimination of duplicative administrative and
infrastructure costs, reduction in procurement expenses, and asset
rationalization. The combined company is also expected to generate substantial
cash flow in the first year of consolidated operations.
William L. Davis, Chairman, President and CEO of RR Donnelley, said, "Today's
announcement is a tremendously positive step forward in the continued evolution
and development of RR Donnelley. The transaction will place the new RR Donnelley
among the Fortune 250. It is great news for our customers, our employees and our
shareholders. I am especially pleased that Mark Angelson will be leading this
company and look forward to a smooth transition."
Mark A. Angelson, CEO of Moore Wallace, said, "This transaction is strategically
and financially compelling, bringing together the industry's most established
and highly regarded companies and the industry's most advanced technologies to
create a dynamic new business platform. The combination will enable the new RR
Donnelley to offer the world's leading companies a comprehensive suite of print
and related products and solutions that will meet the demands of our growing
customer base. Through this combination, the new RR Donnelley will serve
leading global, national, regional and local customers and will provide every
printing need a company of any size could require."
Mr. Angelson continued, "With a broad base of highly profitable businesses and a
strategic approach to managing our capital, the new RR Donnelley will generate
substantial cash flow after servicing the dividend and making disciplined
capital expenditures. We will continue our commitment to use that cash flow on
an accretive basis."
Stephen M. Wolf, a Director of RR Donnelley, said, "Together, these two storied
companies will have the scale and financial strength to compete successfully
well into the future. Mark is a highly respected and superb leader with a solid
track record in delivering growth and shareholder value, while maintaining a
strong focus on customer satisfaction. The Board and I believe that he is the
right person to take the combined company forward and deliver on its promise to
all of its constituencies. I very much look forward to working with him in the
years ahead."
Alfred C. Eckert III, Chairman of the Moore Wallace Board, said, "We have
created considerable equity for our shareholders and the prospects are excellent
for continuing to build significant value. I am enthusiastic about this
transaction and its potential. I look forward to serving on the Board of the
new RR Donnelley and to chairing its newly-created Executive Committee."
The transaction is subject to approval by RR Donnelley stockholders and Moore
Wallace shareholders, and Ontario court approval of a plan of arrangement, which
will provide for the compulsory exchange of each outstanding share of Moore
Wallace for 0.63 of a RR Donnelley share. In addition, the transaction is
subject to anti-trust clearance and Investment Canada approval, and is expected
to close in the first quarter of 2004. The transaction is intended to qualify as
a tax-free reorganization for U.S. federal income tax purposes. It is expected
to be taxable to Canadian shareholders of Moore Wallace.
Morgan Stanley provided mergers and acquisitions advice to RR Donnelley. Sidley
Austin Brown & Wood LLP and Stikeman Elliott LLP provided legal counsel to RR
Donnelley. Goldman, Sachs & Co. provided mergers and acquisitions advice to
Moore Wallace. Sullivan & Cromwell LLP and Osler, Hoskin & Harcourt LLP provided
legal counsel to Moore Wallace.
A conference call discussing the transaction will be held on Monday, November
10, 2003 at 8:00 a.m. (CST) or 9:00 a.m. (EST). The toll-free dial-in number is
888-735-8703 and the number for participants located outside the U.S. is
706-634-6309. The U.S. replay number is 800-642-1687 (706-645-9291 for
international participants) and for all participants wishing to listen to the
replay the access code is 3926061. A replay of the call will be available from
11:00 a.m. (CST) or 12:00 p.m. (EST) on November 10, 2003 to 11:00 a.m. (CST) or
12:00 p.m. (EST) on November 17, 2003.
A slide presentation and live audio webcast of the call will also be available
and archived on both companies' web sites at http://www.rrdonnelley.com/ and
http://www.moorewallace.com/.
About RR Donnelley
RR Donnelley (http://www.rrdonnelley.com/) prepares, produces and delivers
integrated communications across multiple channels for content owners, such as
publishers, merchandisers, and telecommunications companies as well as capital
markets and diversified financial services companies. As a single source
supplying services up and down the communications value chain, the company
excels in digital photography, content management, printing, online services,
and print and package logistics. With these integrated services, RR Donnelley
provides effective solutions for its customers' targeted communications and
delivery needs. Headquartered in Chicago, IL, RR Donnelley serves a global
customer market and has 30,000 employees in more than 200 locations in North
America, South America, Europe and the Asia/Pacific Basin.
About Moore Wallace
Moore Wallace is a leading single-source provider of print management and
outsourced communications, delivering to its customers one of the widest array
of products and services at one of the lowest total costs. The company operates
in three complementary business segments: Forms and Labels, Outsourcing and
Commercial Print. The Forms and Labels business designs, manufactures and sells
paper-based and electronic business forms and labels and provides electronic
print management solutions. The Outsourcing business provides high-quality,
high-volume variably imaged print and mail, electronic statement and database
management services. The Commercial Print business produces high-quality,
multi-color personalized business communications and provides direct marketing
services, including project, database and list management services. For more
information, visit the company's web site at http://www.moorewallace.com/.
This news release contains statements relating to future results of the combined
company including statements (i) as to expected annual revenues of the combined
company of $8 billion, (ii) that the transaction will be accretive to the
combined company's earnings in the first year of operations, excluding the
impact of transaction-related charges, (iii) as to the expected generation of at
least $100 million in cost savings in the first 12-24 months after the closing,
on an annualized basis, (iv) that the combined company will generate substantial
cash flow in the first year of consolidated operations, and (v) as to the
expected maintenance of the annual dividend, as well as other anticipated,
believed, planned, forecasted, expected, targeted and estimated results and the
combined company's outlook concerning future results, that are "forward-looking
statements" as defined in the U.S. Private Securities Litigation Reform Act of
1995. Readers are cautioned not to place undue reliance on these forward-looking
statements and any such forward- looking statements are qualified in their
entirety by reference to the following cautionary statements. All
forward-looking statements speak only as of the date hereof and are based on
current expectations and involve a number of assumptions, risks and
uncertainties that could cause the actual results to differ materially from such
forward-looking statements.
Factors relating to the completion of the transaction and the integration of the
businesses that could cause material differences in the expected results of the
combined company include, without limitation, the following: the development and
execution of comprehensive plans for asset rationalization, the ability to
eliminate duplicative overhead without excessive cost or adversely affecting the
business, the potential loss of customers and employees as a result of the
transaction, the ability to achieve procurement savings by leveraging total
spending across the organization, the success of the organization in leveraging
its comprehensive product offering to the combined customer base as well as the
ability of the organization to complete the integration of the combined
companies without losing focus on the business. In addition, the ability of the
combined company to achieve the expected revenues, accretion and synergy savings
will also be affected by the effects of competition (in particular the response
to the transaction in the marketplace), the effects of paper and other raw
materials and fuel price fluctuations and shortages of supply, the rate of
migration from paper-based forms to digital formats, the impact of currency
fluctuations in the countries in which RR Donnelley and Moore Wallace operate,
general economic and other factors beyond the combined company's control, and
other risks and uncertainties described from time to time in RR Donnelley's and
Moore Wallace's periodic filings with United States and Canadian securities
authorities, as applicable.
This communication is not a solicitation of a proxy from any security holder of
Moore Wallace or RR Donnelley. Moore Wallace and RR Donnelley intend to file a
Joint Management Information Circular and Proxy Statement regarding the proposed
transaction with the U.S. Securities and Exchange Commission (SEC) and the
securities commissions or equivalent regulatory authorities in Canada. WE URGE
INVESTORS IN RR DONNELLEY AND MOORE WALLACE TO CAREFULLY READ THE JOINT
MANAGEMENT INFORMATION CIRCULAR AND PROXY STATEMENT WHEN IT BECOMES AVAILABLE
BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION ABOUT RR DONNELLEY, MOORE WALLACE
AND THE PROPOSED TRANSACTION. Investors will be able to obtain the documents
free of charge at the SEC's website, http://www.sec.gov/, and at the website of
the Canadian System for Electronic Document Analysis and Retrieval (SEDAR)
maintained by the Canadian Securities Administrator at http://www.sedar.com/.
Documents filed with the SEC by RR Donnelley will be available free of charge
from Investor Relations, RR Donnelley, 77 West Wacker Drive, Chicago, IL 60601,
Tel. (312) 326-8926. In addition, documents filed with the SEC by Moore Wallace
will be available free of charge from Moore Wallace, One Canterbury Green,
Stamford, CT 06901, Attention: Investor Relations, Tel. (203) 406-3749. RR
Donnelley, Moore Wallace and their executive officers and directors may be
deemed to be participants in the solicitation of proxies from RR Donnelley and
Moore Wallace security holders in favor of the proposed transaction.
Information regarding the security ownership and other interests of RR
Donnelley's and Moore Wallace's executive officers and directors will be
included in the Joint Management Information Circular and Proxy Statement.
Satellite coordinates for RR Donnelley-Moore Wallace b-roll:
When: Sunday, November 9, 2003
Time: 6:30-6:45 PM ET
Coordinates: Telstar 6, Transponder C-15, DL: 4000 (V)
When: Monday, November 10, 2003
Time: 10-10:30 AM ET (fed in rotation)
Coordinates: Telstar 6, Transponder C-22, DL: 4140 (H)
When: Monday, November 10, 2003
Time: 1:30-2:00 PM ET (fed in rotation)
Coordinates: Telstar 5, Transponder C-19, DL: 4080 (V)
Contacts:
RR Donnelley Moore Wallace
Investors: Investors:
Lisa Mount: 312-326-8926 Julie Gottlieb: 203-406-3825
Media: Media:
Katherine Divita: 312-326-8336 Abernathy MacGregor Group
or Steve Frankel/Kenny Juarez
Citigate Sard Verbinnen 212-371-5999 or 917-324-3922
Judy Brennan: 312-895-4700
Jonathan Gasthalter: 212-687-8080
DATASOURCE: RR Donnelley; Moore Wallace
CONTACT: Investors - Lisa Mount, +1-312-326-8926, or Media - Katherine
Divita, +1-312-326-8336; or Judy Brennan, +1-312-895-4700, or Jonathan
Gasthalter, +1-212-687-8080, both of Citigate Sard Verbinnen, all for RR
Donnelley; Investors - Julie Gottlieb, +1-203-406-3825, or Media - Steve
Frankel, +1-212-371-5999, or Kenny Juarez, +1-917-324-3922, both of Abernathy
MacGregor Group, all for Moore Wallace
Web site: http://www.rrdonnelley.com/
http://www.moorewallace.com/