Quebecor rejects Donnelley's $1.55 billion 'sweetened' bid

11 June 2009

Canada's leading media group Quebecor World Inc. yesterday rejected the sweetened takeover bid from rival RR Donnelley & Sons, the world's largest printing service provider.

The proposed cash-and-stock deal was valued at $1.55 billion consisting of $1.135 billion in cash and 30 million Donnelley's outstanding shares worth $415 million, which is $200 million higher compared to the previous bid in May. (See: Donnelley bids $1.35 billion to takeover rival Quebecor)

The Montreal-based Quebecor filed for bankruptcy protection in January 2008 in the US and Canada, with assets of around $500 million and liabilities amounting more than $1 billion. It filed a new restructuring plan, hoping to emerge from bankruptcy by mid-July.

After a series of negotiations with the Chicago-based media giant, Quebecor's independent directors concluded that the bankruptcy protection offered more value to the shareholders at lower risk compared to Donnelley's bid adding that a ''superior recovery'' would result from the restructuring underway that includes a plan for conversion of debt into equity.

Further to the proposed restructuring, the lenders would get new equity shares which are expected to begin trading next month. The company expects to churn out a small profit in 2010.

Donnelley indicated its latest offer was ''the highest and best''. Further to the rejection by Quebecor its previous offer of $1.35 billion, Donnelley added $178 million in cash and $21.6 million in shares pushing up the value to $1.55 billion making it more competitive. The proposal also included taking up of obligations for the defined benefit pension plans.