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R.R. Donnelley Sets $2.8 Billion Deal for Moore Wallace

The combination will create an $8 billion-a-year commercial printer.
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R.R. Donnelley & Sons

(DNY)

agreed to acquire

Moore Wallace

(MWI)

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in a $2.8 billion stock deal -- creating the largest commercial printing company in North America, the companies said in a news release Sunday.

The deal also calls for Moore Wallace Chief Executive Mark Angelson, 52, to become CEO of the newly combined R.R. Donnelley. He will replace Donnelley Chairman, President and CEO William Davis, 60, who announced in July that he would step down once a successor was found.

Under terms of the deal, which awaits shareholder approval, Donnelley will pay 0.63 share for each Moore Wallace share. The deal values Moore Wallace shares at $17.66, a 16% premium from Friday's close of $15.25. Donnelley will also assume $900 million of Moore Wallace's debt. Donnelly shareholders will own 53% of the combined firm -- which will keep the same name and stock symbol, trading on the Big Board -- while Moore Wallace shareholders would own the remaining 47%.

Donnelley, whose range of printed materials includes magazines, telephone books, catalogs and corporate financial documents, will have a combined $8 billion in revenue and more than 50,000 employees worldwide. Donnelley's stock ended Friday at $28.03.

The company expects the acquisition to add to Donnelley's operating earnings in the first full year and it envisions at least $100 million in annual cost savings from eliminating duplicated costs within two years of the closing -- officials told Dow Jones Sunday there would be some job losses due to the merger.

Stephen Wolf, a Donnelley director best known as a turnaround expert in the airline industry, will become nonexecutive chairman.