LSC comments on DOJ action regarding proposed transaction with Quad
LSC Communications announced that the U.S. Department of Justice filed a lawsuit in the United States District Court for the Northern District of Illinois to enjoin Quad's proposed acquisition of LSC Communications. The companies believe that the DOJ has reached the wrong conclusion in its assessment of the transaction and LSC will join Quad in vigorously defending the lawsuit in court. Contrary to the DOJ's position, the benefits and synergies to be realized from the proposed acquisition are pro-competitive and will benefit the companies' clients for the following reasons: There is significant excess capacity in the printing industry today and this transaction would improve efficiencies and lower printing costs; Many printers have the capability to print the same jobs as LSC Communications or Quad and successfully compete with both companies on quality and price; Barriers to expansion and entry in the printing business are low and printers can easily expand their production capacity through acquisitions or with modest capital expenditures on equipment and facilities that are readily available; and The trend toward digital substitution increases competition and disincentives price increases. "We believe that the DOJ is wrong in its assessment of our transaction and that its action is counterproductive, especially in the context of the industry trends and continued consolidation. We continue to believe that our proposed combination will provide an overall more efficient experience for our clients," said Thomas J. Quinlan III, LSC Communications Chairman, Chief Executive Officer and President. "As we move forward, we will continue to be focused on serving our clients' needs with the same level of service, innovation, and industry leading solutions that they have come to expect. We remain fully committed to this transaction and believe that this is the best path forward for our company and all of our stakeholders."The all-stock transaction was announced on October 31, 2018, and was approved by shareholders of both companies on February 22. At this time, the companies are unable to predict the timeframe for completion of the litigation or closing of the transaction.