US print giants Quad/Graphics and LSC Communications have called off their massive merger deal, which was blocked following an antitrust lawsuit from the Department of Justice last month.
Quad and LSC’s deal, which would have created America’s largest print company with total sales value of $8bn, was subject to government litigation on the grounds that it would limit the US heatset market to essentially only one major printer.
The move is good news for competition in the US magazine, catalogue, and book printing markets, said assistant attorney general Makan Delrahim of the Justice Department’s Antitrust Division.
“This result is a victory for American consumers and publishers, and a testament to the Division’s resolve to enforce the antitrust laws.
“Had this merger gone forward, it would have harmed competition that benefits publishers, retailers, and, ultimately, consumers through lower prices and greater availability of printed products from popular books to grade school textbooks,” he said.
According to Thomas J. Quinlan III, chairman, president and CEO of LSC, the decision to call off the merger was mutual.
“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 as dedicated as ever to serving our clients’ needs with the same level of service, innovation and industry-leading solutions that they have come to expect. Moving forward, we will continue to drive shareholder value,” he said.
Joel Quadracci, chairman, president and CEO of Quad, said he was “disappointed” by the Justice Department’s decision to block the merger, and that the lawsuit did not reflect modern print dynamics and the competition from 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,” he said.
Quad will now have to pay LSC a termination fee of $45m.