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Industry

U.S print merger terminated following lawsuit

LSC Communications, which was set to be acquired by Quad/Graphics, has announced the two companies have called off the deal following a Department of Justice (DOJ) antitrust lawsuit.

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The merger of the two biggest magazine and book printers in the U.S has been terminated

Quad first announced its intentions to purchase LSC in October 2018, in a transaction valued at $1.4bn (£1.1bn). The merger would have combined the only two significant magazine, catalogue and book printers in the U.S, monopolising book printing to give American publishers only one option.

The DOJ filed a lawsuit in June blocking the merger and arguing that the move would make Quad the only dominant player in the printing industry in North America.

“We disagree with the DOJ’s conclusion regarding our transaction, especially in the context of industry trends,” comments Thomas J. Quinlan III, LSC’s chairman, chief executive officer and president.

“However, we and Quad recognise the significant additional time and resources that would be required to challenge the DOJ’s complaint and have therefore decided mutually that it is in the best interests of our respective companies to terminate the merger agreement.”

We are disappointed by the Justice Department’s decision to sue to block the transaction and believe that the lawsuit does not reflect the dynamics of print today

As part of the merger agreement, Quad will have to pay LSC a $45m (£36.2m) termination fee.

Joel Quadracci, Quad chairman, president and CEO, comments: “Quad’s commitment to our clients, shareholders and employees, and dedication to preserving a vibrant print option that can compete in the digital age, were driving forces behind this business combination and aligned with our long-term business strategy.

“We are disappointed by the Justice Department’s decision to sue to block the transaction and believe that the lawsuit does not reflect the dynamics of print today and the competitive effect of digital media.

“However, rather than devote time and resources to prolonged litigation, we are choosing to focus on ensuring that our clients benefit from our Quad 3.0 growth strategy through exciting innovations in printing and integrated multichannel marketing solutions that reduce complexity, increase efficiencies and enhance marketing spend effectiveness. We believe this focus is in the best long-term interest of all our stakeholders.”

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