Quad/Graphics Inc. and LSC Call Off Merger

Quad/Graphics Inc. made waves last October when it announced it would be acquiring its biggest competitor, Chicago-based LSC Communications, as part of a $1.4 billion all-stock transaction. The deal immediately drew the attention of the U.S. Department of Justice, which announced its intention to block the merger.

The DOJ filed a lawsuit in which it claimed Quad’s acquisition of LSC would eliminate Quad’s primary competitor and essentially create a monopoly in the magazine, catalog, and book printing markets. If the merger went through, the DOJ argued, Quad could exert unilateral control over pricing and production of these products, which would be detrimental to publishers and American consumers.

The case was scheduled for trial this November. After initially stating their intention to fight the suit, Quad and LSC decided to call off the merger last week. While both printers made it clear they disagreed with the DOJ’s claims, they ultimately decided that the fight wasn’t worth it at this time. The DOJ, on the other hand, called the outcome a victory for publishers and American consumers.

Are digital marketing channels the real threat?

While the Justice Department’s suit focused on the ongoing competition between Quad and LSC, they neglected the competition from outside the industry. It’s no secret that there has been a significant shift in how brands are allocating their marketing dollars, funneling more and more money to digital channels.

This shift has impacted the printing industry, which is why Quad still defends the acquisition of LSC. Quad saw the merger as an important step in:

  • Strengthening its offerings as a marketing services partner to current and future clients.
  • Expanding its footprint within the industry, while continuing to employ tens of thousands of employees.
  • Remaining an attractive option in a world that is spending more and more money on social platforms, search engines and other digital media.

Where does SPC fit into all of this?

If Quad’s purchase of LSC had gone through, it wouldn’t have impacted SPC’s current or future business outlook since we do little to no business in the magazine, catalog, and book printing spaces. But we do see strategic moves like the joining of the two printers as an inevitable measure to extend growth opportunities in the current brand and direct response marketing worlds.

“For companies to survive and effectively compete, regardless of the industry, you must evolve and adapt to factors that may be out of your control. That’s why we kept a close eye on Quad’s acquisition of LSC. While we understand the Justice Department’s intent to protect consumers, we agree with the bigger picture that recognizes the growing impact of digital marketing services and media. Printers will continue to look for investments that integrate logical extensions to their core business so we remain a valued client partner.”

-Adam LeFebvre, President of SPC

As one of the largest independently owned printers in the country, SPC continues to invest in digital technology, as it has proven to play an important role in helping print marketing deliver the more personalized and real-time-relevant experience that the digital marketing arena offers. Plus, we will keep working with our clients to offer broader capabilities that build and execute end-to-end marketing plans.

Moving forward, SPC will continue to keep close tabs on how the big players work to shift the industry landscape. However, we’ll be focusing more on our own ongoing commitment to innovation, which will ensure our success and, more importantly, our clients’ success.

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