Valassis Buys Advo for $1.3 Billion
Valassis Communications, Inc. has agreed to buy direct mail marketer Advo for $1.3 billion.
Under the purchase, Valassis will buy all outstanding common shares of Advo stock for $37 per share and refinance about $125 million in existing debt. Advo’s shared mail distribution business reaches up to 114 million households, or 90% of U.S. homes, with its ShopWise advertising mailer. Valassis, best known for its newspaper-delivered promotions and advertisements, reaches more than 60 million households, the companies said yesterday in a joint announcement.
“We will have an unsurpassed ability to deliver value and savings to consumers where, when and how they want—and to do so with advanced analytics and targeting capabilities that maximize advertisers’ return on investment,” said Alan F. Schultz, Valassis chairman, president and CEO, in a statement.
Schultz will remain in his three roles. S. Scott Harding, Advo CEO, will work as a consultant to the combined company. The Valassis board of directors will remain intact.
The acquisition creates the nation’s largest integrated media services provider, serving 20,000 advertisers worldwide, including 94 of the top 100 advertisers in the U.S., the companies said. Revenue for the two should reach $2.65 billion next year. The deal is expected to close in three to four months.
Upon news of the deal, Advo shares soared 48% to a 52-week high of $35.68 yesterday afternoon, while Valassis shares dropped 14% to a 52-week low of $19.79. The company will be headquartered in Livonia, MI, home to Valassis, but plans also call for maintaining a “substantial” presence in Windsor, CT, where Advo is based.
Founded in Hartford, CT, in 1929, Advo mails about 27 billion pieces annually, and is the U.S. Postal Service’s largest private customer.
In March, Valassis settled with the Federal Trade Commission over charges that it tried to collude with its only FSI rival, News America Marketing, to eliminate competition between the two. Under the terms of the settlement, Valassis is barred from engaging in similar anticompetitive conduct (PROMO Xtra, March 17, 2006)
