November 11, 2003

Donnelley merger could bolster business at Mattoon facility

MATTOON -- The merger of R.R. Donnelley with a Canadian printer bodes well for the largest factory in Coles County.

According to officials with the Donnelley facility in Mattoon, the corporate buyout of Ontario-based Moore Wallace Inc. will dramatically expand the customer base of both companies. And that could lead to more business -- and more jobs -- for the local plant.

"We're definitely hoping that two plus two equals five," said Isabelle Day, vice president of manufacturing in Mattoon. "I certainly would not anticipate any job loss, either short-term, or long-term."

On Sunday, the Donnelley corporation agreed to acquire Moore Wallace in a deal the companies valued at $2.8 billion. The merged printing giants will have approximately 50,000 employees worldwide, providing customers with products such as magazines, catalogues, telephone directories, books, financial documents, highly personalized direct mail, and labels.

The combined company will keep the Donnelley name and will be based in Chicago. Mark Angelson, CEO of Moore Wallace, will become new CEO, succeeding Donnelley Chairman and CEO William L. Davis, who announced in July he was retiring.

"This transaction is strategically and financially compelling, bringing together the industry's most established and highly regarded companies and the industry's most advanced technologies to create a dynamic new business platform," Angelson said in a statement.

The Mattoon facility employs 1,625, and prints such magazines as Better Homes & Gardens, Martha Stewart Living, Glamour and Redbook. Other Donnelley plants produce magazines such as Reader's Digest, as well as books, including the best-selling Harry Potter novels.

The 139-year-old Donnelley is one of the world's largest printing companies, employing 30,000 employees worldwide.

Moore Wallace was created in January when commercial printer Moore Corp. agreed to pay $1.1 billion in cash and stock for Lisle, Ill.-based Wallace Computer Services Inc. The company of approximately 20,000 employees provides commercial print, direct-mail, customer communications, forms, labels and distribution services.

Day said the two companies are "very complimentary" because their products will mesh well, with little redundancy. "There is very little overlap," said Day.

That also means a compilation of two diverse client lists, which could lead to new accounts for Donnelley, she added. Additionally, a "bigger, stronger" company may prove more successful in the marketplace, resulting in more overall business, said Day.

Thus, an increase in demand may translate to an increase in work force, she said.

Under terms of the merger, Moore Wallace shareholders will receive 0.63 share of RR Donnelley stock for each Moore Wallace share. The deal values Ontario-based Moore Wallace at $17.66 a share, about a 16 percent premium for the company, whose shares closed at $15.25 Friday on the New York Stock Exchange. Donnelley shares last traded at $28.03.

The deal also calls for Chicago-based Donnelley to assume $900 million in Moore Wallace debt. Boards of both companies have approved the deal, which is subject to shareholder and regulatory approvals. The deal is expected to be completed in the first quarter of 2004, according to the companies' news release.

The merged company will have more than $8 billion in annual revenue, company officials said.

"I think it's all upside potential," said Day. "We're all viewing this as very positive."

Contact Nathaniel West at nwest@jg-tc.com or 238-6860.