Montreal-based Transcontinental and Wisconsin-based Quad/Graphics have struck an agreement for two major transactions. Transcontinental will acquire all of Quad/Graphics' Canadian shares (including seven printing facilities), and in return, Q/G will acquire all of Transcon's operations in Mexico.

Both transactions are expected to close in the fall.

Quad/Graphics:

Quad/Graphics will transfer six Canadian printing plants and one premedia operation to Transcontinental. The facilities are located in Edmonton, AB; Concord, Aurora and Markham, ON; Lasalle and Montreal, QC; and Dartmouth NS. These operations employ 1,500 people and are forecasted to generate approximately US$310 million of revenues in fiscal 2011.

Quad/Graphics chairman, president & CEO Joel Quadracci said in a statement that in order to achieve growth in the highly competitive Canadian market, a substantial capital investment was required. Instead, the company sees Mexico as a more compelling long-term value creation opportunity.

"Our agreement with Transcontinental is compelling for many reasons," said Quadracci. "We have long recognized the high-growth potential in Mexico where we already have operations. This acquisition supports our strategy to grow profitably in geographies and segments where we can be a market leader through a diverse product offering, and a superior and efficient marketing platform."

Transcontinental:

Transcontinental will divest its Mexican assets, consisting of three facilities and 900 employees. These are forecasted to generate $67 million in revenues in fiscal 2011. The company will additionally transfer its black and white book printing business, destined for US export, which represents approximately $25 million in revenues.

Francois Olivier, president and CEO of Transcontinental, had this to say: "The print markets in general have suffered from overcapacity and more intense competitive pressures in certain niches in recent years, with the proliferation of digital and web communication platforms, technological advances in new printing presses as well as the entry of US players in the Canadian marketplace."

Mr. Olivier noted that the transaction will allow Transcontinental to leverage the over $700 million in investments it has made to its printing platform over the last several years. He expects that these actions will generate at least $40 million for the company within 12-14 months of their completion.

Olivier continued: "The acquisition of the Canadian assets of Quad/Graphics is in line with our strategy to build on our more traditional print assets and is key to maintain a solid business going forward given the competitive industry dynamics."