13 July 2011
Transcontinental acquiring seven Quad Graphics printing locations
MONTREAL—In another momentous move for the Canadian print industry, Transcontinental Inc. is acquiring the Canadian assets of U.S.-based Quad/Graphics, including seven printing facilities, while selling its Mexican assets to Quad/Graphics.

Transcontinental made the announcement earlier today that it will be acquiring the Quad/Graphics' facilities across Canada, including six printing plants and one premedia facility. Those facilities are in Aurora, Concord, and Markham in Ontario; Lasalle and Montreal in Quebec; Edmonton in Alberta and Dartmouth in Nova Scotia.

The operations employ 1,500 people and are forecasted to generate approximately US$310 million in revenue during the fiscal 2011, according to Transcontinental.

But senior management of Transcontinental is being tight-lipped so far about plans for the new acquisitions going forward.

"We want to take time to make sure we understand the (Quad) operation," said François Olivier, president and CEO of Transcontinental, during a conference call today. "We will come back with a firmer plan."

In a release, Olivier stated, "The print markets in general have suffered from overcapacity and more intense competitive pressures in certain niches in recent years, with the proliferation of digital and web communication platforms, technological advances in new printing presses as well as the entry of U.S. players in the Canadian marketplace. These transactions will permit us to improve our capacity utilization rate and better equip us to face these new challenges."

In a separate transaction, Transcontinental will sell its Mexican operations and transfer its Canadian black and white book printing business, destined for U.S. export, to Quad/Graphics.

Transcontinental currently employs approximately 900 people among its three facilities in Azcapotzalco, Toluca and Xochimilco, Mexico, and forecasts to generate approximately US$70 million of revenues for the fiscal year 2011, noted Quad in a release. “By acquiring Transcontinental’s Mexican assets, we will become the leading producer of magazines, retail inserts and catalogs in Mexico,” said Tony Scaringi, newly-named president and general manager of Latin America.

Transcon's black and white book printing business, destined for U.S. export, represents about $25 million in revenues.

Olivier added the combined transactions will generate at least $40 million in net incremental EBITDA (earnings before interest, taxes, depreciation and amortization) for Transcontinental, over 12 to 24 months following the closure of the transactions.

There is no cash changing hands in the transaction, said Olivier.

The transactions are subject to obtaining regulatory clearances, including under the Canadian Competition Act and the Mexican Federal Law on Economic Competition.

If the deals are approved, as expected, Transcontinental will cement its position as the dominant heatset and coldset web printer in Canada. Stay tuned to PrintCAN for more news and analysis.
— Jeff Hayward
Comments:
11. Konabear says:
27 July 2011 at 10:07 AM
I worked at Quads Concord retail plant and was laid off in late April along with 25 other people.Quad was telling it's Canadian employees about how they were going to invest millions of dollars in the Canadian platform but I never believed them due to the fact only the Concord and LaSalle plant made a profit.The Dartmouth and Vancouver plants were down to only running one press in each facility.Transcon will now become the only Canadian printer of retail flyers -no competition except from the US(Vertis which now prints the Sears retail flyer).It will be interesting to see what Transcon does with these Quad plants that have old presses. I would guess they would consolidate operatons - more layoffs and sell the old presses for srap metal. This move was to get the big accounts like Best Buy,Walmart,Dell,Rona,Forzani,Dell,Toyrus,Staples,The Source,Future Shop.The bottom line is that with no Canadian competition for Transcon they can charge these companies a lot more for their printing.
10. Wondering says:
17 July 2011 at 12:03 PM
Just wondering how many of these plants will be around in 12 months? Half ? Maybe? And the employees ????
9. Norman D. Plume says:
15 July 2011 at 1:36 PM
I thought branding the Aurora plant with temporary Quad banners and not changing the signage on the QueNet facility at all was kind of foreboding. I guess Quad never intended to hold on to the Canadian plants in the first place. Hey managers and owners, ever wonder why employees don't give 100% and then some any more? Because they're not as gullible as you think they are, maybe?
8. Former Qw says:
14 July 2011 at 9:16 AM
I think this is great for QNet, Transcon has been investing heavily in the future. They understand that print is one media and that customers are looking for more touchpoints. This agreement will inject life into what was a great organization at one time not to mention the great people that are there. Also US companies are now playing in Canada and have a lots of money behind them. Best of Luck!
7. Billy Bob says:
13 July 2011 at 9:17 PM
The true final spike to QNet NM from Transcon..., go in for the kill
6. Rory says:
13 July 2011 at 8:28 PM
You forgot something, Printvet! Namely shovelling all the profits to Videotron instead of reinvesting, and when Videotron started turning a profit and QW started to slide, just hacking and slashing. Otherwise, I think you nailed it right on the head.
5. Hatchet Man-kk says:
13 July 2011 at 3:30 PM
Mmmmmmm.... Pie. KK.
4. Printvet says:
13 July 2011 at 3:30 PM
The die was cast when Quebecor overpaid for World Color and then let WC management run the combined entity. This was quickly followed by PK Peledeau's micromanagement of what had been up until then a very successful operation, centralization of just about everything, from purchasing to accounts payable and receivable. Control was taken away from those closest to the market, and responsibility without authority became the order of the day. The final move in this"perfect storm" was getting rid of the management who had built the company and replacing them with inexperienced personnel with few or no relationships with long term customers. Take all of the above, combine it with the internet effect, a poor economy, free trade, a stronger Canadian dollar and sprinkle on top an endless stream of increasingly poor management and you get what you got today. Some day this will be Harvard Business School study in how not to run a company. RIP Big Q - you deserved better.
3. Litholitho says:
13 July 2011 at 2:36 PM
Macboy might be right. Rumour is that Qnet in Markham will close by summers end. Trancon's premedia operation already has too many people as it is. I hear McDonalds is hiring though. Prepress is dead.
2. Macboy says:
13 July 2011 at 1:47 PM
Bye-Bye QNet Media in Markham. Transcon's Premedia in Mississauga will take you best and close the doors...finally. But don't worry, management will be fine. No competition anymore. The old Litho Plus will finally be put to rest. RIP printing industry.
1. Printer says:
13 July 2011 at 11:58 AM
I sense there will be many lay offs as a result of this. Quad was already laying off workers and any new business would have been contract wins from Transcontinental. Now Transcon will have the whole pie to themselves.
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Zebra Paper was great at making these products at much lower prices - what a sad move....
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