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Banta Receives Unsolicited Takeover Bid: East Coast printer Cenveo Inc. makes $1.1 billion offer.

By Matt Kinsman

Thursday, August 10, 2006

Stamford, CT-based printing company Cenveo Inc. has made an unsolicited offer to acquire Menasha, WI-based Banta Corp. for approximately $1.1 billion. Cenveo is offering $46 per share in cash and Banta shares jumped from a closing of $33.9 on Tuesday to $45.53 at press time on Thursday.

On Wednesday, Cenveo chairman and CEO Robert Burton Sr. released an open letter addressed to Banta chairman and CEO Stephanie Streeter saying he was disappointed in hearing from her that Banta Corporation is not for sale and that Banta executives were not responding to calls or e-mails.

Streeter then fired off her own letter saying she found Burton's actions "inexplicable," that she did not speak to Burton directly as he implies and that "I am extremely disappointed that you chose to release publicly the letter that your legal advisors faxed to us late last night prior to giving us the opportunity to review your highly conditional unsolicited indication of interest in combining our two companies." She concludes the letter by saying Banta is committed to acting in its best interests of its shareholders and will review the letter with financial and legal advisors UBS Investment bank and Foley & Lardner.

At least one media banker believes the offer to be in the best interest of shareholders. "It's hard to see how Banta's shareholders can turn this down," said Michael Alcamo, president of M.C. Alcamo & Co., an investment banking firm. "Banta has a great customer list, but its margins are low. With excess capacity in the printing industry, this tie-up is a great consolidation play in an industry where consolidation is inevitable."

If Cenveo did acquire Banta, it would likely mean consolidation of operations on the East Coast. In 2005, Cenveo reported $1.74 billion in revenue, while Banta did about $1.5 billion. Through the first six months of 2006, Banta reported revenue of $745 million.

In July, Banta announced that is was reorganizing its five print divisions into two, with its book, publications and consumer catalog operations becoming a unit called Banta Publishing & Catalog Solutions and direct marketing and literature management divisions becoming Banta Direct Marketing Solutions.

Prior to the announcement, Banta has been trading at 0.66 times revenue, which has made it a takeover target for some time, Alcamo said. "If it's not this buyer, another will step in because printing companies should trade at least at one times revenue," he added.