ADVO Advances after Buyout Offer From Valassis
Both companies specialize in mail advertising. Advo(NYSE:AD) Primarily sends targetted direct mailings, while Valassis(NYSE:VCI) mainly sends out newspaper inserts.
Immediatly following the news shares of ADVO leaped. So far today the company has grown 47%, up to $35.77 per share. The biggest benefit of the buyout will be cost savings. The companies are very similar and it is estimated that the combined company could save as much as $40 million per year.
The acquistion requires Valassis to pay $1.175 billion in cash as well as acquire $125 million in debt, and closes in three to four months. Shares of Valassis dropped more than 15% to $19.62 today, signally that investors believe the deal favors ADVO.
July 6th, 2006 at 2:34 pm
This sounds like a very smart merger, the only thing I wonder is what was keeping them from just expanding their company.