Formation of Leading Media Services Company
- Creation of diversified media services company with complementary
products, services and clients
- All cash price of $37 per share (approximately 32 million diluted shares)
- Transaction value is approximately 8.3x fiscal year ended Sept. 30, 2006
pro-forma EBITDA, including an estimated $40 million of cost synergies
- Expected to be accretive in 2007 on a cash earnings per share (EPS) basis
which excludes estimated amortization of intangibles arising from purchase
accounting
- Combined offering provides advertisers with both unmatched scale and
proven products; backed by a strong foundation of world-class targeting and
analytics
LIVONIA, Mich., and WINDSOR, Conn., July 6 /PRNewswire-FirstCall/ --
Valassis (NYSE: VCI), a leading company in marketing services, announced
today that it has entered into a definitive merger agreement with ADVO
(NYSE: AD), the nation's leading direct mail media company, under which it
will acquire all of the outstanding common shares of ADVO stock for $37 per
share in cash in a merger. The fully financed transaction is valued at
approximately $1.3 billion (on a diluted basis), including approximately
$125 million in existing ADVO debt which Valassis expects to refinance.
This acquisition will create the nation's largest integrated media
services provider. The combination will feature the most comprehensive
product and customer offering in the industry serving 20,000 advertisers
worldwide, including 94 of the top 100 advertisers in the United States.
The combined company will be positioned to capture growth across the
expanded product and service portfolio, delivering customized, targeted
solutions on a national, regional, zip code, sub-zip code and household
basis. ADVO's shared mail distribution business penetrates up to 114
million households, or 90% of U.S. homes, adding substantially to Valassis'
weekly newspaper distribution of over 60 million households. The combined
company will have 7,900 employees with operations in nine countries.
"Together, Valassis and ADVO will be well positioned for growth as a
more diversified company with complementary capabilities, product offerings
and clients," said Alan F. Schultz, Valassis Chairman, President and CEO.
"We will have an unsurpassed ability to deliver value and savings to
consumers where, when and how they want -- and to do so with advanced
analytics and targeting capabilities that maximize advertisers' return on
investment. This combination is a first in the media services industry and
uniquely positions us to capture growth by anticipating the needs of the
marketplace and evolving to meet them."
S. Scott Harding, ADVO Chief Executive Officer, added, "Advertisers'
needs are becoming increasingly sophisticated and require solutions that
are both scalable and customized. Our new company will deliver on these
requirements with an unrivaled portfolio of products, leadership across
multiple media platforms, proven targeting expertise and unmatched reach.
In today's media world, that is an undeniably attractive combination."
Mr. Schultz continued, "We are very pleased to welcome ADVO into the
Valassis family. This is an exciting opportunity for employees, clients and
shareholders."
Transaction Overview
Valassis expects the transaction to be accretive in 2007 on a cash EPS
basis, excluding estimated amortization of intangibles arising from
purchase accounting. Annual cost synergies of approximately $40 million are
anticipated to be achieved beginning in 2007. The combined company expects
revenue of approximately $2.65 billion in calendar year 2007. EBITDA in
2007 for the combined company is anticipated to be between $305 million and
$315 million.
The combined company will be headquartered in Livonia, Mich., and
maintain a substantial presence in Windsor, Conn. Mr. Schultz will remain
Chairman, President and Chief Executive Officer and Mr. Robert L. Recchia
will remain Chief Financial Officer. Mr. Harding will serve as a consultant
to the combined company. The Valassis Board of Directors will remain
intact.
The merger agreement, which has been approved by the Boards of
Directors of both companies, remains subject to the approval of ADVO
shareholders, regulatory approvals and other customary conditions. The
transaction is expected to close in three to four months.
Valassis' financial advisors are Bear, Stearns & Co. Inc., who also
provided committed financing for the transaction, with McDermott Will &
Emery LLP as legal counsel. ADVO's financial advisors are Citigroup Global
Markets, Inc. with Wachtell, Lipton, Rosen & Katz and Kirkpatrick &
Lockhart Nicholson Graham LLP as legal counsel.
Investor Conference Call Information
An investor conference call will take place at 11 a.m. EDT today. The
call-in number is (800) 240-6709. The call will be available via webcast
through the Investor section of both company Web sites at
http://www.valassis.com and at http://www.advo.com, and replay through July
20, 2006 at (800) 405-2236 and the pass code number is 11065702. This press
release and the webcast will be archived on the company Web sites under
"Investor."
About Valassis
Valassis offers a wide range of marketing services to consumer packaged
goods manufacturers, retailers, technology companies and other customers
with operations in the United States, Europe, Mexico and Canada. Valassis'
products and services portfolio includes: newspaper-delivered promotions
and advertisements such as inserts, sampling, polybags and on-page
advertisements; direct-to-door advertising and sampling; direct mail;
Internet-delivered marketing; loyalty marketing software; coupon and
promotion clearing; and promotion planning and analytic services. Valassis
has been listed as one of FORTUNE magazine's "Best Companies to Work For"
for nine consecutive years. Valassis' subsidiaries include Valassis Canada,
Promotion Watch, Valassis Relationship Marketing Systems, LLC and NCH
Marketing Services, Inc. For additional information, visit the company Web
site at http://www.valassis.com.
Safe Harbor and Forward Looking Statements
Certain statements found in this document constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995. Such forward-looking statements involve known and unknown
risks and uncertainties and other factors which may cause the actual
results, performance or achievements of Valassis to be materially different
from any future results, performance or achievements expressed or implied
by such forward-looking statements. Such factors include, among others, the
following: price competition from Valassis' existing competitors; new
competitors in any of Valassis' businesses; a shift in customer preference
for different promotional materials, strategies or coupon delivery methods;
an unforeseen increase in Valassis' paper costs; economic disruptions
caused by terrorist activity, armed conflict or changes in general economic
conditions; changes which affect the businesses of Valassis customers and
lead to reduced sales promotion spending; the ability and timing for the
closing conditions to be satisfied in connection with Valassis' merger
agreement with ADVO; and the ability for Valassis to achieve synergies in
connection with the merger and the integration of ADVO successfully into
its business. Valassis disclaims any intention or obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
About ADVO
ADVO is the nation's leading direct mail media company, with annual
revenues of nearly $1.4 billion. The company's industry-leading targeting
technology, coupled with its unparalleled logistics capabilities, enable
retailers seeking superior return on investment to target, version and
deliver their print advertising directly to consumers most likely to
respond. Serving 17,000 national, regional and local clients, ADVO reaches
114 million households, more than 90% of the nation's homes, with its
ShopWise(TM) shared mail advertising. The company can be visited online at
http://www.ADVO.com.
Safe Harbor and Forward Looking Statements
This press release may contain certain statements regarding ADVO's
business outlook, prospects, future economic performance, anticipated
profitability, revenues, expenses or other financial items, future
contracts, market opportunities and other statements that are not
historical facts, such statements are "forward looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934, each as amended. Such forward looking
statements are based on current information and expectations and are
subject to risks and uncertainties which could cause ADVO's actual results
to differ materially from those in the forward looking statements. ADVO's
business is promotional in nature, and ADVO serves its clients on a "just
in time" basis. As a result, fluctuations in the amount, timing, pages,
weight, and kinds of advertising pieces can vary significantly from period
to period, depending on its customers' promotional needs, inventories, and
other factors. In any particular period these transactional fluctuations
are difficult to predict, and can materially affect ADVO's revenue and
profit results. ADVO's business contains additional risks and uncertainties
which include, but are not limited to: general changes in customer demand
and pricing; the possibility of consolidation in the retail sector; the
impact of economic or political conditions on advertising spending and
ADVO's distribution system; postal and paper prices; possible governmental
regulation or legislation affecting aspects of ADVO's business; the
efficiencies achieved with technology upgrades; fluctuations in interest
rates; the ability and timing for the closing conditions to be satisfied in
connection with ADVO's merger agreement with Valassis and other general
economic factors.
Additional Information
ADVO will file a preliminary and definitive proxy statement and other
relevant documents concerning the proposed merger with the Securities and
Exchange Commission. Its shareholders are urged to read the definitive
proxy statement when it becomes available, because it will contain
important information. Shareholders may obtain, free of charge, a copy of
the definitive proxy statement (when it is available) and other documents
filed by ADVO with the Securities and Exchange Commission at the Securities
and Exchange Commission's website, http://www.sec.gov. In addition, documents
filed with the Securities and Exchange Commission by ADVO will be available
free of charge from ADVO. ADVO and its directors and executive officers and
certain other of its employees may be soliciting proxies from shareholders
of ADVO in favor of the proposed transaction.
Information concerning the participants in the proxy solicitation will
be set forth in the proxy statement when it is filed with the Securities
and Exchange Commission.
SOURCE Valassis
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Related links:
http://www.valassis.com
http://www.advo.com
CONTACT:
Sherry Lauderback, Director, Investor
Relations and Corporate Communications, +1-734-591-7374,
lauderbacks@valassis.com, Mary Broaddus, Supervisor, ,
+1-734-591-7375, broaddusm@valassis.com, both of Valassis
Investor Relations and Corporate Communications; Chris Hutter,
NVP, Finance, +1-860-285-6424, Cthutter@ADVO.com, Pam Kueber, VP,
Communications, +1-860-298-5797, Pjkueber@ADVO.com, both of ADVO
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