Wisconsin-based Quad/Graphics, Inc.,  on Oct. 31 acquired Chicago-based LSC Communications, Inc., in a transaction described by its top executive as a “defining moment” in the company’s 47-year history.

LSC Communications employees at the Owensville plant heard about the all-stock transaction sale valued at $1.4 billion via an email that morning. Managers at the Owensville facility said they could not comment on the sale. The sale includes the refinancing of LSC Communications’ debt, according to a jointly issued release from Quad and LSC.  Had they been combined as of the end September, the company’s annual revenue would have been approximately $8 billion.

The deal which is expected to be finalized sometime in mid-2019 pending approval by Quad shareholders and regulators. Joel Quadracci will be the chairman, president and chief executive officer of the combined company which is headquartered in Sussex, Wis.

“This is a defining moment in Quad’s 47-year journey,” said Quadracci in a statement announcing the deal.

 “We look forward to welcoming LSC Communications’ employees to our team,” said Quadracci. “They will be part of a dynamic, values-based organization that is focused on creating a better way for our clients and our company. From this historic business combination, our clients will benefit from a highly efficient print platform, and the additional cost- and time-saving opportunities generated from enhanced production and distribution efficiencies and flexibility, expanded mailing and logistics services, and strengthened print management services. We are confident in the synergies we will generate from this transaction. We will draw on our deep integration experience to successfully align our operations and create long-term sustainable shareholder value. In addition, with an all-stock transaction, our combined shareholders will benefit from our continued strong and healthy balance sheet.”

According to a report in the Milwaukee Journal Sentinel, Quad/Graphics acquired businesses in recent years which have increased their printing revenues from $1.8 billion in 2009 to $4.1 billion last year, and its payroll from fewer than 9,000 to 22,000 employees. LSC Communications had revenues of $3.6 billion last year 44,000 employees.

Quadracci went on to tell the Journal Sentinel that the acquisition gives his family-owned company “a pretty massive scale” and will generate cash to help it invest in its transition toward becoming not just a printer but “more of a marketing services partner” to its customers.

“We’re actually spending more time starting to play the role of the big (marketing) agency,” he said. “But we happen to own a lot of the girth and the execution of print, which is not going away. It has been under decline, will continue to decline, but is not going to leave the picture.”

LSC was created two years ago after RR Donnelley & Sons, Co., split off its magazine, catalog, retail inserts and book- printing operations. Reports indicate Quad’s sales also from those operations but its book printing in only a fourth of what LSC produces.

Along with its facilities in Owensville, which specializes in books, LSC operates 59 manufacturing and distribution plants. There are 55 plants in the Quad operation and there are expectations the printing giant will attempt to realize $135 million in “net synergies” in the next two years through anticipated cost reductions.

The Journal Sentinel reports an analysis posted on a research site that stated Quad officials were expecting $80 million in “synergies” (reductions) in “capacity rationalization" (read plant closings or cutbacks) and an addition $50 million in cuts from “administrative efficiencies” (reducing the workforce).

The report noted Quad has closed more than 30 plants during acquisitions of other printing operations since 2010. The acquisition gives Quad 114 facilities including 14 in Wisconsin which employ 7,500 workers.

“Since becoming a standalone public company at the end of 2016, LSC Communications has added critical scale, capabilities and technologies,” said Thomas J. Quinlan III, LSC Communications chairman, COE and president. “We have done so through acquisitions and divestitures as we work to strengthen our position as a leading innovator in print and multichannel logistics. We are now taking the next major step in our evolution. Together with Quad, we will be better positioned in the dynamic industry environment to efficiently serve our clients though a broader set of offerings to help meet and manage their needs. We are pleased that LSC Communications’ shareholders will benefit from the significant projected synergies as well as the potential upside enabled by ownership in the combined company. We at LSC Communications are proud of what we have accomplished, and with Quad we look forward to continuing to build on our rich history of providing clients with innovative industry leading solutions.”

LSC stockholders will get 0.625 shares of Quad Class A common stock for each LSC share they own — a 34 percent premium based on the closing prices of LSC and Quad on Oct. 30 — the day before acquisition plans were announced.

Disclosure of the deal boosted LSC shares by 11 percent Oct. 31 and closed up 94 cents at $9.43. Quad shares, however, fell $2.82 to close at $15.43, down almost 15.5 percent on what generally was a positive day for the stock market.

Quadracci said the deal, importantly, keeps voting control in the hands of the Quadracci family, “so we can do the right things for the long term and not the short term. We’re not day traders here.”

With the transaction, LSC shareholders will own about 29 percent of Quad stock and about 11 percent of the voting shares. The Quadracci family controls the company through a trust that holds about 64 percent of the voting power of Quad’s stock.

The company expects the acquisition of LSC to add to earnings, excluding one-time integration costs. Quad will expand its board of directors to add two members from the LSC board. The deal is not contingent in financing since Quad has secured a financing commitment from JPMorgan Chase Bank, N.A., to refinance Quad’s existing credit facility and LSC Communications’ outstanding debt, according to the release.

A positive, locally, is the plant’s profitability and that it has extended contracts for printing books, The Republican was told.