TM1203_Transcontinental Acquires CC3
MONTREAL, Dec. 18, 2003 - Transcontinental Inc. today announced the acquisition of CC3, a growing company in the direct marketing industry in the United States. CC3 has a network of eight facilities in Pennsylvania, California and Texas, offering a complete range of direct marketing services through its unique integrated platform. It delivers over 1.5 billion direct marketing pieces a year. CC3 has over 1100 employees and annual revenues of about C$167 million (US$127 million). This acquisition is the largest in Transcontinental's history in terms of revenues. CC3 was owned by Providence Equity Partners Inc., a private investment firm with over US$5 billion under management.
The consideration for the acquisition is C$133 million (US$101 million), plus 350,000 Transcontinental warrants issued at an exercise price of C$19.91 per share, the trading price per Transcontinental share on September 9, 2003, when the agreement in principle was reached between the parties.
"Today is a great day for Transcontinental," said Rémi Marcoux, Chairman of the Board and CEO of Transcontinental. "Over the past year we have repeatedly stated that we were actively looking for companies in the direct marketing sector in the U.S., a niche that offers value-added services we identified as strategic to our growth, provided, however, that we not compromise our strict acquisition criteria. CC3 meets them all: it complements our core activities, it's profitable and has good growth potential, and it has a seasoned management team and a culture that's compatible with our own. Last but not least, it will contribute to earnings within 12 months of the acquisition and will generate synergies. We will also benefit from the knowledge and experience of Don McKenzie, president and CEO of CC3, as well as that of his management team and all his employees."
Luc Desjardins, President and COO of Transcontinental, said he is excited about CC3 joining Transcontinental: "There couldn't be a more natural fit or one that is more promising for our future expansion in the direct marketing industry in the United States! We already had a solid base in Canada and in the northeast U.S. with our plants in Toronto, Montreal and in the Philadelphia region: with plants in Los Angeles, Fort Worth and Philadelphia, CC3 will allow us to cover all of North America. The addition of CC3 also means we can offer a full line of products and services at a one-stop shop by providing the activities that complement our offering: database design and management, list brokerage and management, permission-based e-mail, traditional and electronic fulfilment, online tools for workflow management, and many loyalty management programs. Add in CC3's seasoned management team, and this is the North American platform and integrated model we were looking for. CC3 also brings Transcontinental a customer base that includes a number of Fortune 500 companies in the banking and financial, insurance, telecom and retail industries, among others."