Quebecor may be hungry for BGF?
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Tuesday April 27, 7:38 pm Eastern Time
Canada's Quebec Printing is acquisitions hungry
By Robert Melnbardis
MONTREAL, April 27 (Reuters) - Its profits rising and armed with a new $1-billion warchest, Canada's Quebecor Printing Inc. (IQI.TO - news) is ready to reach into its coffers to further expand its global commercial printing operations.
During a news conference following the Montreal-based company's annual meeting on Tuesday, its two top executives dropped broad hints that they are braced to buy almost any size of rival.
Charles Cavell, president and chief executive, told reporters the group is looking over ''a buffet table of opportunities filled with things that we can do.''
As he was speaking, the company announced a debt refinancing that gives it access to $1 billion of new bank credit. The funds will be used to repay existing bank loans and for operating requirements, capital expenditures and future acquisitions.
Asked whether Quebecor Printing was prepared for a $1-billion acquisition, Cavell replied: ''Could we? Yes we could. Will we? Time will tell.''
Cavell said that with a debt-to-equity ratio of about 45:55 and strong cash flow, Quebecor Printing has the financial might to fund large acquisitions.
He pointed to the company's first-quarter results, released on Tuesday, which showed a 20 percent increase in net profit to $22 million, or 19 cents a share, from $18 million, or 16 cents a share, a year earlier. Sales were $910 million versus $882 million.
Quebecor Printing is the 82-percent-owned cornerstone of Montreal-based publishing, printing and broadcasting group Quebecor Inc. (QBRa.TO - news). Its $3.8 billion of annual sales make it North America's second-largest commercial printer after the $5 billion at Chicago's R.R. Donnelley & Sons (DNY - news).
Cavell said the Montreal company may soon make a reality of the dream of its late founder, Pierre Peladeau, that Quebec or Printing be the world's largest and most profitable printer.
He said Quebecor has been approached by other commercial printers offering to sell assets or operating units. Cavell declined to identify specific offers, but cited two companies, Big Flower Press Holdings (BGF - news) and World Color Press Inc. (WRC - news), that may have assets for sale in the coming months.
Advertising and marketing group Big Flower said last week it was exploring strategic alternatives, including outright sale of the company. Big Flower's main unit, Treasure Chest, is one of the biggest U.S. producers of newspaper inserts and advertising circulars.
Greenwich, Conn.-based World Color said last week it would eliminate redundant printing capacity acquired during its latest buying spree.
Pierre Karl Peladeau, who resigned as chief operating officer of Quebecor Printing on Tuesday ahead of being approved as president and chief executive officer of parent Quebecor on Thursday, said the group will continue to pursue acquisitions with prudence.
''We don't need to fall in love with the deal. We need to be assured that it will be accretive to earnings per share,'' said Peladeau, whose family controls Quebecor.
Aside from looking toward the United States for acquisition targets, Quebecor Printing expects to widen its global reach during the year. Already employing 28,000 people in 14 countries, the company may add two more national flags to its roster, Cavell said.
''There is a flag in my pocket. I'm not ready to show it,'' he added.
Quebecor Printing shares rose 30 Canadian cents to C$35.55 on the Toronto Stock Exchange and were flat at $24.13 on the New York Stock Exchange on Tuesday. Parent Quebecor shares rose 65 Canadian cents to C$33.25 in Toronto.
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