Valassis, a company that has substantial weight in U.S. direct marketing as well as in the newspaper pre-print market, recently announced an agreement to be acquired by Harland Clarke Holdings, an integrated payment solutions and marketing services provider, who will take Valassis private.
Rob Mason, president and chief executive officer of Valassis, said in a prepared statement, “Under Harland Clarke Holdings, we expect to create a company that is stronger than our individual businesses, which will allow us to pursue our vision of intelligent media delivery while continuing to strengthen our company’s award-winning culture. Harland Clarke Holdings is the right owner for Valassis and has the expertise and resources to accelerate our continued evolution and innovation that will benefit our associates and Valassis’ more than 15,000 clients.” The combination of Harland Clarke Holdings Corp. and Valassis will create a leader in the transaction services, media delivery services, consumer and business direct and education solutions industries with approximately $3.3 billion in combined revenues.
Among other products and services, Valassis produces and markets RedPlum, a print and online coupon book that is including in many newspapers nationwide, including many Hispanic newspapers. Industry observers asked by Portada do not expect major changes to happen in the way Valassis operates. Direct Marketing veteran Shayne Walters, Business Development Director at Synergy Direct Response says the that “the deal will have little or no impact on the sector.Valassis will continue to do what they do.”
The direct marketing industry,particularly as it related to direct print marketing, has faced substantial challenges over the last few years. This has been reflected in Valassis revenues and earnings level. For the third quarter ending Sept. 30, Valassis reported $27.7 million in net earnings on revenue of $489.4 million. In the same quarter last year, net earnings were $36.7 million on revenue of $523.8 million. That represents a 24.6 percent quarterly earnings decline, and a year-over-year 6.6 percent fall in revenue.
Under the terms of the agreement, Harland Clarke Holdings, a wholly owned subsidiary of MacAndrews & Forbes Holdings Inc., will acquire all of the outstanding shares of Valassis for $34.04 per share in cash, representing a transaction value of approximately US $1.84 billion. (Interestingly, Valassis bought ADVO in 2006 for US $ 1.3 billion). The transaction, unanimously approved by both the Valassis and Harland Clarke Holdings Boards of Directors, will be effected through a tender offer by a subsidiary of Harland Clarke Holdings for all of the shares of Valassis, followed by a merger of the acquisition subsidiary with and into Valassis.