Moore Corporation and Wallace Computer Services have announced a merger agreement to form one of the largest providers of print and labelling solutions in the world.
Already providing extensive labelling solutions to the food and beverage industry, the combined company, to be named Moore Wallace, would become one of the world's largest integrated providers of commercial print, direct mail, outsourced customer communications, forms, fulfillment and distribution services.
To complete the merger, Moore will pay approximately $1.3 billion (€1.2m) consisting of approximately $606 million in cash, approximately $470 million in Moore's common shares, and the assumption of approximately $210 million in debt.
Moore will issue approximately 44.2 million common shares to Wallace shareholders, who, following the merger, will own approximately 28 per cent of the combined company. Moore expects to finance the cash portion of the transaction from cash-on-hand and committed financing from a group of banks led by Citigroup/Salomon Smith Barney , Deutsche Bank/Deutsche Bank Securities and Morgan Stanley.
The merger was unanimously approved by both boards of directors and is subject to customary conditions, including among other things, approval by Wallace shareholders and regulatory approvals.
When the merger is completed, the company will have approximately $3.6 billion in annual revenues and over 18,500 employees worldwide. The merger is expected to be immediately accretive to earnings, excluding merger related expenses upon closing of the transaction.
The company expects to generate synergy savings of at least $50 million on an annual basis from asset rationalisation, elimination of redundant overhead and duplicate IT expenditures, procurement savings and the opportunity to leverage a more comprehensive product offering to its broader customer base. The combined company is expected to generate substantial free cash flow in the first year of consolidated operations.
"This is truly an historic merger between two great companies," said Mark Angelson, CEO of Moore. "We are creating a world leader in the printing industry with a strong customer base and a diversified manufacturing platform from which to grow our business. Together we will provide an unparalleled set of print management solutions for our customers. This combination will be impressively accretive to shareholder value and will combine the most talented workforces in the industry."
Angelson will be CEO of the combined company. At the time of the merger, three of Wallace's directors will be offered positions on the Moore Wallace board.
David Jones, Wallace's chairman and chief executive officer said: "This merger will combine the proven strengths of two powerful organisations. Our new company will provide customers with the most innovative and cost effective solutions for all of their printing needs. We will clearly be the industry leader. Customers and shareholders will be well served by this merger."
Founded in 1882, Moore is an international leader in the management and distribution of print and digital information. Moore operates in three complementary business segments: forms and labels, outsourcing and commercial.
Wallace Computer Services is the recognised leader in delivering print management. The company is headquartered in Illinois.