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What happened
Shares of Quad / graphcis (NYSE: QUAD) were slammed on Wednesday. The stock and marketing services company's stock finished trading day down 15.5%.
The decline follows the announcement that the company was acquiring print and digital media solutions company LSC Communications (NYSE: LKSD). The news sent shares of LSC Soaring Communications, up 11.1% by market close.
Image source: Getty Images.
So what
Quad and LSC said in a press release on Wednesday that the decision was finalized in favor of LSC in an all-stock transaction at $ 1.4 trillion when the refinancing of LSC's debt.
LSC shareholders will receive 0.625 shares of Quad share for each LSC share they own. Helping explain the jump in LSC's price on Wednesday, the value of the deal implied a 34% premium to LSC shares' closing price on Tuesday.
Judging by Quad Stock is declining on Wednesday. Quad shareholders may be of LSC's losses recently. In LSC's just-reported third quarter, the company lost $ 4 million on GAAP basis, or $ 0.12 per share. This was over $ 3 million in the year-ago quarter.
Now what
Quad CEO Joel Quadracci is optimistic about the deal.
"Together with LSC Communications," Quadracci Explained in the Two Companies "joint press release on the deal," we will create a compelling combination of talent, expertise and customer technology to further fuel our Quad 3.0 marketing solutions transformation and strengthen the role of print – a proven and trusted media form in today's multichannel world. "
The companies believe the deal will be accretive to earnings when excluding one-time integration costs. "Net synergies are expected to be about $ 135 million, and will be achieved in more than two years and additional cash flow generation," the company said in the press release on the deal.
The acquisition is expected to close in the middle of 2019.
Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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