Transcontinental and World Color Gear Up for Consolidation While Donnelley Inhales Helium

With Transcontinental borrowing money for possible acquisitions and World Color Press making it clear who is in charge, The Big Printer Consolidation Dance had some interesting moves this week.

Meanwhile, industry leader R.R. Donnelley, which tried to be the Great Consolidator a few months ago, has wandered off for a dose of Helium.

Transcontinental announced Thursday that it will try to raise up to $500 million via debt and preferred-shares offerings “for general corporate purposes, which may include the repayment of indebtedness and the financing of acquisitions and investments provided market conditions are favourable.” That is apparently enough cash to gain a controlling stake in the other big printer based in Canada, World Color Press. Or is it still Quebecor World? Or maybe Novink.

World Color Press hasn't completely worked out the name thing since emerging from bankruptcy in July with its new but old name. Its Web site is still Quebecorworld.com, and many of its legal entities include "Novink", which was chosen and then abandoned as the name of the revived company.

But WCP did clear something else up: Mark A. Angelson, the person most responsible for consolidation of the North American printing industry, is definitely running the show. The company announced this week that the former Donnelley chief is now the CEO as well as chairman of World Color Press. Those who know him say he's there to do deals, not to make incremental changes.

What kind of deals Transcontinental has in mind is not clear. Besides the traditional commercial-printing business, it's involved in outsourced newspaper printing, newspaper publishing, and new media.

There was some speculation that Transcontinental's prospects were strained by its deal to print the San Francisco Chronicle because it might be stuck with an idle $230 million printing plant if the money-losing Chronicle's abandoned ink on paper. Hearst threatened to close down the Chronicle earlier this year if it didn't get union concessions.

But the prospectus for Transcontinental's debt offering says the Chronicle contract "provides for indemnification from Hearst Corporation should the San Francisco Chronicle cease publication or be sold." It also says the "contract size is for more than US $1billion (excluding paper) in revenues over 15 years."

And what of industry leader R.R. Donnelley, which made three unsuccessful attempts a few months ago to buy what was then known as Quebecor World? So far this month, it announced it is getting into the printer business in the form of a joint venture with HP to make digital inkjet presses.

It also spent $4.4 million on a minority stake in Helium, a "social publishing platform" that links freelance writers with publishers. It's not clear why Donnelley's interest has turned from buying other printers to Helium.

Maybe some RRD executives still grieving over the Quebecor debacle thought they could console themselves by taking a few big puffs and talking like Donald Duck.