Deconstructing the RR Donnelly – Quebecor Merger Attempt

by admin on June 18, 2009

In case you didn't catch it, the Quebecor board of directors said no to RR Donnelly $1.8 billion of cash, as reported in foliomag.com. PrintCEO also reports the story, along with useful comments at the bottom. All this  happened about 8 days ago, which is how long I have been scratching my head.

So Quebecor, soon to be branded as Novink, is going to try to go it alone. Oh really? So what happened is that creditors of Quebecor must have enough faith in Quebecor management so that they are confident enough to kiss off $1.825 billion. Or, they didn't like the strings that were attached to the money.

Maybe it got political. Anybody who thought that RR Donnelly wasn't going to take over without a whack-whack here and a whack-whack there hasn't been in the business very long. Perhaps the provincial government placed a phone call here and a phone call there and there you go, the board of directors at Quebecor heard the message. Not that I would be outraged if that's what really happened. I mean, I wish some politicians out in British Columbia would give two hoots about the virtual gutting of  the high-tech industry of Vancouver over the last five years.

Unfortunately, nobody (who is not in the know) gets why the takeover bid failed. Quebecor, with new financing, but the same old faces, is going to rise from the ashes and become profitable? Remember, these guys went bankrupt before the economic crisis. Think about that, they were losing money when times were good. What's the size of the market now? Jeepers, how long has Quebecor been in bankruptcy protection? And if has gone political, where are the governments with the bailout coin?

Nope, still a lot of unanswered questions, we can do is guess. Like if Quebecor doesn't get out of bankruptcy protection double-plus quick and start making some coin, then the refusal to be bought out will be a candidate for the trophy given to the 2009 Dumbest Business Decision in Canada.

P.S. This post is probably going to a candidate for lamest post of the year in this blog, but what the hey, my scalp was beginning to bleed from all the head-scratching, and now this topic is out of my brain.

{ 2 comments }

Michael J June 19, 2009 at 7:41 am

My two cents based on staring at my navel is that Quebecor has better dna than RRD. My bet is that it has to do with the fact that they are Canadian. RRD always feels like GM to me. Too big to get out of their own way ande positive that the world of print belongs to them.

Maybe Quebecor has gotten scared straight by seeing how fast it can all come crashing down and will get back to business.

As I say, this is based on no fact that I can point to. Just to chime in.

Simon L June 22, 2009 at 2:45 pm

Some economic journalist in Montreal said that RR Don was only looking for ruinning the restructuration and buy quebecor for very less. And after a lot of closer due to avoid restrucutration, cut even more.

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