Valassis to Acquire Advo, Lawsuit Dropped

Valassis Communications Inc. will acquire Advo Inc. for $33 per share, or roughly $1.2 billion in cash. As part of the purchase agreement, both companies have agreed to dismiss all pending litigation.

The resulting company will provide integrated media services to 20,000 advertisers worldwide. Advo’s shared mail programs reach 114 million U.S. households, while Valassis’ weekly newspaper inserts reach 60 million households. The combined firm will have 7,900 employees and will maintain operations in nine countries.

In late August, Valassis filed papers in the Delaware Chancery Court to rescind its offer. Valassis alleged that Advo management lied about the company’s financial health. According the papers, Advo “intentionally provided Valassis with materially false financial information and withheld material information at a time when [Advo’s] operating income was materially off forecast.”

Advo filed a response with the SEC claiming that the claims were “baseless and without merit.” Advo specifically rejected the charges of fraud and changes in business performance issues that affected the company’s long-term earning potential.

In announcing the acquisition today, Valassis went out of its way to mention “as a result of the extensive discovery proceeding in the litigation, including the continued review of over one million documents provided by Advo and the depositions of over 30 Advo witnesses, Valassis has determined that the evidence will not support the conclusion that Advo or any of its directors, officers, agents or representatives engaged in any fraud or other misconduct in connection with the parties’ entry into their original merger agreement.”