Quad Boosts Retail Ad Insert Business with Deal for Vertis

SUSSEX, WI—Quad/Graphics Inc. and Baltimore-based Vertis Holdings have announced an agreement through which Quad/Graphics will acquire substantially all of the assets comprising Vertis' businesses for $258.5 million, which includes the payment of approximately $88.5 million for current assets that are in excess of normalized working capital requirements.

To facilitate the intended sale, Vertis, along with its subsidiaries, have filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code and, at the same time, filed documents seeking the bankruptcy court's approval of the proposed sale to Quad/Graphics. Vertis has the support of its lenders with respect to the sale.

Quad/Graphics intends to use cash on hand and draw on its revolving credit facility to finance the acquisition of Vertis, which expects to generate approximately $1.1 billion in revenues during fiscal year 2012.

"Quad/Graphics believes in the power of print in today's multichannel media world and this acquisition further strengthens our ability to help retailers and direct marketers drive meaningful business results," said Joel Quadracci, chairman, president and CEO of Quad/Graphics. "The complementary capabilities of our two businesses in retail advertising inserts, direct marketing and in-store marketing will further strengthen and expand our offerings, and will allow us to better serve our clients, achieve additional efficiencies and build long-term value for our shareholders."

It is anticipated that the sale will be approved by the bankruptcy court during the fourth quarter of 2012 and will most likely close in the first quarter of 2013, pending the receipt of customary regulatory approvals. Vertis expects to operate its business as usual until the sale closes and, subject to the bankruptcy court's approval, has obtained $150 million in debtor-in-possession financing from a group of lenders led by GE Capital, Restructuring Finance to meet its financial obligations throughout the Chapter 11 cases.

Vertis says it expects to pay suppliers in the normal course for all goods and services delivered after Oct. 10, 2012. Payment for goods and services delivered prior to the filing will be addressed by Vertis through the Chapter 11 process.

Quad/Graphics will announce its plans for integration following the completion of the sale process, including any changes to the combined company's manufacturing and service platform. PI