Valassis Sues Advo Alleging Fraud

Valassis announced Wednesday that it had filed a lawsuit against Advo, the nation's largest direct mail media company, which it had purchased just three weeks before for $1.3 billion. Valassis claims that it was the victim of fraud and that Advo had misrepresented earnings and internal control problems.

Advo, for its part, called Valassis'charges “baseless and without merit,” and added that they were merely suffering from an extreme case of buyer's remorse.

The announcement had immediate and significant financial implications, particularly for Advo, whose share price plummeted 40% to $21.98 in after-hours trading last Wednesday. Conversely, Valassis benefited modestly, posting a 4.7% gain and bringing their share price up to $22.00.

Advo Inc. on Friday accused marketing company Valassis Communications Inc. of trying to force a lower sale price by suing to terminate their merger agreement.

Shares of Advo,, on Friday regained some of the ground they lost Thursday after Valassis sued to block the $1.3 billion acquisition deal that the companies announced in July.

The combined company was expected to serve about 20,000 advertisers, including 94 of the top 100 in the U.S., with direct mail, newspaper inserts, coupon fliers, e-mail marketing and other programs. Both companies serve advertisers targeting Hispanics through print media.

It would have about 7,900 employees with operations in nine countries, Valassis and Advo said.


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Editorial Staff

Portada Staff

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