What's Driving Quad Graphics Acquisition of LSC Communications

It's not very often that the printing industry makes headlines among the top financial and business news of the day. But stuck somewhere below the seemingly endless drivel of pundit analysis concerning the pros and cons of Facebook's latest quarterly earnings report was the truly blockbuster news that Sussex, Wis.-based Quad/Graphics is acquiring LSC Communications, of Chicago. It will create a combined $8.1 billion, publicly-held company as the result of a whopping $1.4 billion all-stock transaction, which includes the refinancing of LSC Communications' debt.

Assuming regulatory approval, and following the approval of both Quad and LSC shareholders, the deal is expected to close in mid-2019. Quad/Graphics has secured a financing commitment from JPMorgan Chase Bank N.A. to refinance Quad’s existing credit facility and LSC Communications’ outstanding debt.

Annualized net synergies of the acquisition are expected to be approximately $135 million following the deal closing, and Quad/Graphics indicated those savings will be achieved in less than two years through the elimination of duplicative functions, capacity rationalization, improved operational efficiencies and greater efficiencies in supply chain management.

“This is a defining moment in Quad’s 47-year journey,” said Joel Quadracci, Quad/Graphics chairman, president and CEO. “We have grown from a printer with a single facility to a global marketing solutions provider with a seamless, integrated offering that creates more value for all our stakeholders at a time of significant media disruption. Together with LSC Communications, we will create a compelling combination of talent, expertise and client technology to further fuel our Quad 3.0 marketing solutions transformation and strengthen the role of print – a proven and trusted media form in today’s multichannel world.”

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