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Quad/Graphics Moves to Buy Vertis


October 16, 2012
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Quad/Graphics Inc. of Sussex, Wisconsin, signed an agreement to purchase substantially all of the assets of Vertis Holdings for US$258.5 million. The move comes shortly after Vertis filed for Chapter 11 bankruptcy protection in the United States. The US$258.5 million purchase would include a payment of around US$88.5 million for current assets that are in excess of normalized working capital requirements.

Vertis Holdings, Inc., through its subsidiaries, produces insert advertising programs, television listing magazines, comics, and special supplements for newspapers, as well as the design and production of direct mail and related marketing services.

“Quad/Graphics believes in the power of print in today’s multichannel media world and this acquisition further strengthens our ability to help retailers and direct marketers drive meaningful business results,” said Joel Quadracci, chairman, president and CEO of Quad/Graphics. “The combination of Quad/Graphics and Vertis is a natural and strategic fit.”

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Following the pending acquisition announcement, Reuters reported that Standard & Poor’s Ratings Services placed Quad/Graphics Inc. on its CreditWatch list, with a BB+ rating. Standard & Poor stated: “We believe the acquisition will weaken Quad’s business risk profile by increasing its exposure to a poorly performing company in a sector already under secular decline. Vertis will require significant management attention to be integrated efficiently with Quad. As a result, we expect Quad’s EBITDA margin to be negatively affected over the next two years.”

Quad/Graphics announced that it intends to use cash on hand and draw on its revolving credit facility to finance the acquisition of Vertis, which it expects to generate approximately $1.1 billion in revenues during fiscal year 2012.

“The complementary capabilities of our two businesses in retail advertising inserts, direct marketing and in-store marketing will further strengthen and expand our offerings,” added Quadracci, “and will allow us to even better serve our clients, achieve additional efficiencies and build long-term value for our shareholders.”