More Squawk From Jim Cramer: Don't Own RR Donnelley (RRD) Stock for Xerox Deal

Investors should own RR Donnelley (RRD) stock for its breakup value, as a Xerox (XRX) merger won't necessarily occur, Jim Cramer says.
By Rachel Graf ,

NEW YORK (TheStreet) -- Shares of RR Donnelley & Sons (RRD) - Get Report are advancing 3.71% to $19.14 in early-morning trading on Tuesday as it is in talks to be acquired by Xerox (XRX), Bloomberg reports. 

Xerox would then merge part of the owner of the Edgar financial-statement wire service with its copier, printer and related-services business and the remainder of RR Donnelley with its business process outsourcing services, Bloomberg adds.

"I thought that this story was kind of one of these stories that was a little premature," TheStreet's Jim Cramer said on CNBC's "Squawk on the Street" this morning. "I don't think this necessarily is going to happen."

He explained that the deal may take too long to be completed, since split mergers "take forever."

Investors should own the stock for its breakup value, which Cramer said he values around $20 or $21. They should not own shares because they believe Xerox will purchase the company.

RR Donnelley is on track to split into three publicly-traded companies by October, according to a March company statement.

Xerox plans to split into two publicly-traded companies by year end.

Separately, TheStreet Ratings team rates the stock as a "buy" with a ratings score of B.

RR Donnelley's strengths such as its growth in earnings per share, increase in stock price during the past year, notable return on equity and increase in net income outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

You can view the full analysis from the report here: RRD

TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author. 

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