Quad/Graphics to Acquire Worldcolor

Quad/Graphics, Inc., the largest privately held printer in the U.S., and World Color Press Inc., the second largest provider of print, digital and related services in the Americas, announced that their boards of directors unanimously have approved a definitive arrangement agreement whereby Quad/Graphics will acquire Worldcolor, enhancing Quad/Graphics’ position as a leader in the printing industry with increased efficiencies, greater geographic reach and broader product and service scope.

The expanded Quad/Graphics will have nearly 30,000 employees serving customers in the U.S., Canada, Latin America and Europe. Worldcolor and Quad/Graphics had aggregate unaudited revenues for the 12-month period ended September 30, 2009 of U.S. $5.1 billion and aggregate unaudited adjusted EBITDA of U.S. $647 million. Worldcolor’s and Quad/Graphics’ unaudited adjusted EBITDA margins for the same period were 9.7% and 17.6%, respectively.

The transaction is expected to close approximately in the summer of 2010 and be accretive to the earnings of the combined enterprise. Quad/Graphics’ management estimates that the combination will generate approximately U.S. $225 million in pre-tax net annualized synergies within 24 months.

Concurrent with the closing of the transaction, Quad/Graphics intends to become a publicly traded company. Quad/Graphics expects to register its Class A Common shares with the U.S. Securities and Exchange Commission (SEC) and proceed with a listing on a leading U.S. exchange. Under terms of the agreement, Worldcolor shareholders will receive at closing approximately 40 percent of the outstanding shares of Quad/Graphics and Quad/Graphics’ shareholders will hold approximately 60 percent of the shares.

The acquisition will enhance Quad/Graphics’ position as a commercial printing leader in North America serving the magazine, catalog, retail insert, book, directory, and direct mail product segments and enhance Quad/Graphics’ standing as one of the leading commercial printers in the world.

“By combining the strengths of both companies, we will enhance our leadership position in the printing industry,” said Joel Quadracci, Quad/Graphics chairman, president and CEO. “Customer needs and demands are rapidly evolving, and our expanded company will be even better equipped to meet those demands. With increased access to capital markets, we plan to make appropriate investments in our platform and data-driven solutions to secure the future of print. With our strong commitment to innovation and customer satisfaction, combined with the greater operational efficiencies we are targeting, we will be better able to achieve our strategic objectives and continue to generate industry-leading margins and profitable growth, all while creating opportunities for our customers, shareholders and employees.”

“This transaction presents compelling opportunities for the achievement of synergies and other efficiencies,” said Mark Angelson, Worldcolor chairman and CEO. “Quad/Graphics has a long tradition of leadership and operational excellence. I have the highest regard for Joel and his management team, whom I consider to be among the best and brightest executives anywhere. They have built a company known for having the industry’s best technology, automation and robotics, and world-class customer service. Quad/Graphics will make a fine, stable home for Worldcolor managers and employees. I look forward to joining the Quad/Graphics Board and sharing our experience as we combine these storied companies while ensuring that we focus on maximizing shareholder value and creating opportunities for customers and employees well into the future.”

Added Mr. Quadracci, “Through our comprehensive due diligence, we learned Worldcolor has very talented and professional employees who have performed well in challenging and turbulent times. We look forward to having Worldcolor employees join and strengthen our industry-leading team. In addition, 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.

“Mark Angelson has a long tenure in public company management and an unmatched record of success in leading consolidations in our industry and creating value for public company shareholders. I am pleased that he will join our Board and that we will benefit from his experience as we integrate these two companies,” concluded Mr. Quadracci.

Through the acquisition, Quad/Graphics plans to achieve greater operational efficiencies, capacity rationalization, enhanced production flexibility and reduced cycle time, and significantly improve its supply chain management capabilities. Additionally, Quad/Graphics expects to benefit from a strong pro forma credit profile with enhanced liquidity and generate solid free cash flow.

Mr. Quadracci will serve as chairman, president and CEO of the expanded company. The future Board will be comprised of the six current Quad/Graphics directors and two Worldcolor directors: Mr. Angelson, who will chair the Board Committee on Integration and Consolidation, and a director to be named prior to closing, who will become a member of the Audit Committee, bolstering Quad/Graphics’ commitment to excellence in financial reporting.