Printing Powerhouse: Cenveo Nabs Cadmus

Shares of Cadmus surge nearly 17% on its sale to Cenveo; $235 million deal would make a far larger graphics-printing outfit

Cenveo (CVO) is buying Cadmus Communications (CDMS) for more than $235 million, in a deal the companies say will create North America’s third-largest graphic communications company. Larger rivals include RR Donnelley & Sons (RRD) and Quebecor World (IQW).

The deal, subject to approvals, is expected to close during the first quarter of 2007. Cenveo's offer values Cadmus at $24.75 per share and includes the assumption of about $195 million in debt.

Shares of Cadmus soared 16.6% to $24.46 each at 4 p.m. EST on the Nasdaq on news of the company’s sale. Cenveo stock gained 9.3% to settle at $21.70 on the New York Stock Exchange.

Cadmus, which is based in Richmond, Va., calls itself the world’s largest provider of production and content management for scientific, medical and technical journal publishers. It has yearly revenue of about $450 million. Combined, the companies expect annual sales of more than $2 billion.

“Cadmus will become part of a much larger business, a business better able to meet the growing and full service needs of Cadmus' customers, and to use our scale to deliver increased efficiencies and a wider service offering to them,” Cadmus CEO Bruce V. Thomas said in a Dec. 27 press release announcing the deal.

Cadmus also says it is the fifth-biggest periodicals printer in North America. Meanwhile Cenveo, of Stamford, Conn., provides print and visual communications services such as commercial printing, envelopes, labels, packaging and business documents.

“Cadmus' operations are a perfect complement to Cenveo's product line and will create immediate cross-selling opportunities for both companies' customers,” Cenveo CEO Robert G. Burton said.

Cenveo expects to begin generating at least $20 million annually in savings within the first 12 months after the deal closes. The company expects to take steps such as cutting costs in overlapping areas such as administration and infrastructure.

Cenveo has a voting agreement with Thomas as well as entities affiliated with Cadmus’ largest shareholder, Nathu R. Puri. These major Cadmus shareholders, which together own around 21.1% of Cadmus’ shares, have agreed to vote in favor of the deal with Cenveo.

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