SUSSEX, Wis. – Quad/Graphics, Inc. (NYSE: NYSE:QUAD), a global marketing experience company, has agreed to sell most of its European business to Capmont GmbH, a German investment firm, for approximately $45 million. The transaction encompasses Quad/Graphics Europe print and ink-manufacturing in Wyszków, Poland, the Peppermint agency in Warsaw, Poland, and Quad POS, which operates across Europe.
The sale, expected to close by the end of 2024, is subject to customary regulatory approvals. Quad's shared services employees in Poland, who support the company's marketing platform in the Americas, are not included in this deal.
Joel Quadracci, Quad's Chairman, President, and CEO, stated that the divestiture aligns with the company's strategy to focus on growth as a marketing experience company. Quad will continue to operate state-of-the-art printing facilities in the Americas, which Quadracci believes will offer the greatest value to their clients.
Henrik Munte, Managing Director of Capmont, expressed confidence in the acquired entities' abilities to lead in the European print and integrated marketing solutions space, highlighting their advanced production capabilities and experienced workforce.
Quad plans to use the proceeds from the sale to reduce its debt and invest in enhancing its marketing experience offerings, aiming to increase shareholder value. The company's European presence began in 1998 and expanded with acquisitions in 2008 and 2015, establishing significant operations in the region.
Quad, which employs around 13,000 people globally, provides a range of marketing services, leveraging technology and data-driven insights to streamline marketing complexities. The company serves a diverse client base, including blue-chip companies across various industries.
This move is part of Quad's ongoing transformation and commitment to innovation and sustainability. Financial advisory for the transaction was provided by AlixPartners, with Eversheds Sutherland serving as legal advisor.
The information in this article is based on a press release statement from Quad/Graphics, Inc.
In other recent news, Quad/Graphics, a marketing services firm, announced a strategic partnership with Google (NASDAQ:GOOGL) Cloud to enhance its marketing solutions using artificial intelligence (AI). The collaboration aims to integrate Google Cloud's AI into Quad's proprietary data stack, creating advanced personalized marketing content across various channels. This partnership is expected to streamline marketing efforts, increase efficiency in spending, and improve the connection between brands and their audiences.
In financial developments, Quad/Graphics reported a 10% decrease in net sales to $634 million in Q2 2024, compared to the same quarter in the previous year. Despite this decline, the company saw an improvement in its adjusted EBITDA, which increased to $52 million with a margin of 8.2%. Looking ahead, Quad/Graphics projects a decline in full-year net sales by 5% to 9%, with adjusted EBITDA expected to range between $205 million and $245 million.
In addition to these developments, Quad/Graphics introduced its MX solutions suite, launched In-Store Connect with Save Mart and Homeland Stores, and consolidated its creative business lines under the new agency name, Betty. The company also unveiled 3D Commerce, an automated 3D scanning solution, in collaboration with Covision Media. These are all part of Quad/Graphics' strategic initiatives aimed at transforming its business model amidst a challenging market.
InvestingPro Insights
Quad/Graphics' recent decision to sell its European operations aligns with its strategic focus on growth as a marketing experience company. This move is particularly significant when considering the company's current financial position and market performance.
According to InvestingPro data, Quad/Graphics has a market capitalization of $302.53 million USD. The company's revenue for the last twelve months as of Q2 2024 stood at $2,777.1 million USD, with a revenue growth of -12.8% over the same period. This decline in revenue is consistent with one of the InvestingPro Tips, which notes that analysts anticipate sales decline in the current year.
Despite the revenue challenges, there are positive indicators for Quad/Graphics. An InvestingPro Tip suggests that net income is expected to grow this year, and analysts predict the company will be profitable this year. This potential turnaround in profitability could be partly attributed to the company's strategic moves, including the European business divestiture.
The stock has shown strong performance recently, with a 30.04% price total return over the past month and a 28.25% return over the last six months. This aligns with another InvestingPro Tip highlighting the strong return over the last month. However, investors should note that the RSI suggests the stock is in overbought territory, indicating potential for a price correction.
For those interested in a deeper analysis, InvestingPro offers 9 additional tips for Quad/Graphics, providing a more comprehensive view of the company's financial health and market position.
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