R.R. Donnelley To Buy Consolidated Graphics In $620 Mln Deal; Sees Q3 Above View

(RTTNews) - Print and related services provider R.R. Donnelley & Sons Co. (RRD) agreed to acquire Commercial printing service provider Consolidated Graphics Inc. (CGX), the companies announced on Thursday. The transaction valued at about $620 million, plus the assumption of Consolidated Graphics' net debt.

The agreement has been unanimously approved by each company's Board of Directors.

As per the terms of the transaction, Consolidated Graphics shareholders will receive a combination of $34.44 in cash and a fixed exchange ratio of 1.651 RR Donnelley shares for each outstanding share of Consolidated Graphics they own or $62 per share based on RR Donnelley's closing share price on October 23rd.

The acquisition is expected to be both deleveraging and accretive to RR Donnelley's non-GAAP earnings per share within 12 months following the closing of the transaction, which is expected to occur in the first quarter of 2014.

The completion of the transaction is subject to customary closing conditions, including regulatory approval and approval of Consolidated Graphics' shareholders.

Consolidated Graphics' Chairman and Chief Executive Officer, Joe R. Davis entered into a voting agreement, under which he agreed to vote his shares in favor of the approval of the merger agreement. Davis' shares currently represent about 16.5% of Consolidated Graphics' outstanding shares.

In a separate press release, R.R. Donnelley & Sons announced preliminary results for the third-quarter 2013.

R.R. Donnelley expects net earnings attributable to shareholders to be $15 million or $0.08 per share, non-GAAP net earnings of $0.38 per share, and revenue of $2.61 billion for the third-quarter. Analysts polled by Thomson Reuters expect the company to report earnings of $0.35 per share and revenues of $2.53 billion for the third-quarter. Analysts' estimates typically exclude special items.

In addition, R.R. Donnelley's Board declared a quarterly dividend of 26 cents per common share. The dividend is payable December 2, 2013 to stockholders of record as of the close of business on November 14, 2013.