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Feb 1, 2010 12:00 AM
Quad/Graphics recently announced it will acquire Worldcolor. The news sent financial analysts and journalists around the world scrambling to MapQuest Sussex, WI. Some consulted their AP Stylebooks to see if it was acceptable to describe Wisconsin as “Illinois' hat.”
Just kidding. We truly needed the Wall Street Journal to help us grasp the details of the deal that will give shareholders of Worldcolor about 40 percent of a combined company that will list on a U.S. stock exchange.
Reporter Judy McKinnon described the complex transaction: “Quad/Graphics will register its Class A common stock on a U.S. exchange, and at closing, each Worldcolor common share will be converted via a share exchange ratio into Class A common shares of the combined company.
“The share-exchange ratio can't be determined until just before closing because it depends on how many preferred shares will be converted into Worldcolor common shares and how many Worldcolor warrants are exercised. At closing, Worldcolor shareholders will receive 40 percent of the shares and Quad/Graphics will hold on to its existing 60 percent.”
According to a press release issued on behalf of both companies, the transaction is expected to close approximately in the summer of 2010. Quad/Graphics' management estimates that the combination will generate approximately U.S. $225 million in pretax net annualized synergies within 24 months.
But what about the legendary Quad culture? When I think of Quad/Graphics, I think of Harry V. “Larry” Quadracci wearing an employee uniform. I recall Quad's progressive approach to employee benefits, its uncompromising commitment to training and its impressive technical achievements. How will Quad fold Worldcolor into this mix?
Consultant Clint Bolte (www.clintbolte.com) must have read my mind: “I am not aware of any substantial printing company in the world that values its own unique culture more than Quad,” says Bolte. “Thirty years ago Quad's Bean (Atlanta) acquisition was reported to be struggling because of this culture incompatibility issue. As a result, virtually all of Quad's dynamic growth since then has been through startups.”
Being a family-run company and consistently investing in cutting edge technology has contributed to Quad's success, but Bolte says there's more to it than that.
“Quad buys the latest proven technology, as do others, but it then challenges a team of operators to master the beast, look to correct its inevitable weaknesses, and come up with auxiliary features that can be patented to lift the entire application above the rest of the industry. No other printer has ever been able to perpetuate this success formula like Quad/Graphics.”
While the merged balance sheet sounds exciting, Bolte warns that a large task looms ahead for the combined company: “Quad's operations team has never ever had this kind of a challenge to boot strap a printer of this size before. It is interesting that Joel Quadracci put Mark Angelson, Worldcolor's CEO, in charge of the integration and consolidation effort. Angelson has had extensive experience formerly with RR Donnelley in this mergers and acquisition game and therefore the rationalization task.”
It's going to be interesting to watch this story unfold. “Whether Quad realizes the Angelson-promised $225 million in synergies in the first two years will probably never be known,” says Bolte. “The North American printing industry will be stronger for the exercise. And the whole industry wishes Quad well in the process.”
Are you ready for a touchpad tablet computer? There's been a huge buzz about Apple's new iPad. I particularly liked Ethan Nicholas' guest blog at www.techcrunch.com. “The iPad is a computer for people who don't like computers. … For what most of these people need a computer for, the iPad is perfect. It doesn't do as many things as a ‘real' computer does, but the things it does do, it does in a way even non-tech-savvy people can figure out, and there are far fewer ways to screw it up.”
Finally, a shout out to digital print pioneer Tukaiz. The company's PixyMe is the first iPhone and iPod Touch app that uses image personalization to send an e-mail greeting or printed postcard through the mail. See www.pixyme.com.