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    Valassis Buys Advo, Ending Feud Over Deal

    LIVONIA, Mich. -- Valassis Communications Inc. based here said Tuesday it would buy fellow direct marketer Advo Inc. for $1.2 billion, as the two companies agreed on a lower price for a disputed takeover and dropped lawsuits against one another.

    LIVONIA, Mich. -- Valassis Communications Inc. based here said Tuesday it would buy fellow direct marketer Advo Inc. for $1.2 billion, as the two companies agreed on a lower price for a disputed takeover and dropped lawsuits against one another.

    Valassis, a newspaper insert distributor, will pay $33 per share in cash for Windsor, Conn.-based Advo, a discount of about 11 percent to the $37 a share it agreed to pay when the two companies first struck a deal.

    Valassis had sued Advo to void the original deal, accusing Advo management of misrepresenting the company's financial health. Advo, a direct mail advertiser, filed a countersuit charging that Valassis has no right to back out of the agreement.

    As part of Tuesday's deal, the companies have agreed to dismiss their litigation. Valassis' obligations under the amended merger agreement are not conditioned upon obtaining financing, and there are no conditions to close other than the approval of Advo stockholders at a special shareholders meeting.

    The parties expect to close the transaction during the first quarter of 2007. Once closed, the deal should create the nation's largest integrated media services provider. The combined companies said they would be positioned to capture growth across the expanded product and service portfolio, delivering customized, targeted solutions on a national, regional, zip code, sub-zip code and household basis.

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