Special Report: What Does Quad's Worldcolor Acquisition Mean to the Marketplace?
Quebecor/Worldcolor has grown by acquisition. You can even say they're good at it, though it took a lot of different management teams to consume everything from Ringier to Foote & Davies, American Signature to Worldcolor—not to mention all those smaller commercial operations. Quad spent a full decade muttering "never again" after acquiring the WR Bean plant in the early 90s. They're much better suited to green field startups, and have done well starting and expanding the plants in Wisconsin and upstate New York. These days, there's nearly nothing left to acquire, so Mark Angleson theoretically will end up with a lot of free time. Instead, the new company needs to master plant consolidation, a knotty little problem that stumped Quebecor after the Quebecor-World merger. Nevertheless, here's one more example of how different the two merging companies are—one grows by a relentless elimination of competitors through acquisition, the other starts new plants and steadily enlarges operations in a central location.
I could give more examples of the differences, but the key point is that in many cases the differences will tend to spawn winners or losers. There aren't a lot of compromises between some of these poles, but for the merger to succeed culturally the people affected will have to find them. If not, they'll be living through a particularly nasty round of corporate politics.
INBOX: Will Worldcolor customers have the ability to exit their contracts given the change of ownership? And will Quad customers be able to do the same given that the company will be going public?
BROWN: This depends on the contract. I include change of control provisions in contracts I help negotiate, but no printer's boilerplate treats the subject. Some publishers will have added a termination option for an event like this, but even those that do may be wondering exactly how to use it. It's not easy to be sure you want to exercise a right to terminate until the consequences of a merger have had time to play out. If you're inclined to terminate over price, you have to have some concerns that the merger hopes to stop price erosion and allow for increases. If you're terminating over cultural issues, you haven't yet much to go on. The company could be a stunning improvement, or you might be hearing grinding noises for years to come. Though the results of the merger are unknown, if I were a publisher happy with my current plant I wouldn't be especially quick to look for an exit. I'd rather watch things unfold from a good seat. What I might try is to negotiate a bridging contract extension. I'd exercise my right to terminate by amending my contract to allow termination in the future with, say, six months notice.