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    Valassis Acquiring ADVO

    LIVONIA, Mich. and WINDSOR, Conn. -- Marketing services company Valassis has entered into a definite merger agreement with ADVO, the country's leading direct mail media company, to acquire all of the outstanding common shares of ADVO stock for $37 per share in cash in a merger.

    LIVONIA, Mich. and WINDSOR, Conn. -- Marketing services company Valassis has entered into a definite merger agreement with ADVO, the country's leading direct mail media company, to acquire all of the outstanding common shares of ADVO stock for $37 per share in cash in a merger.

    The transaction is valued at about $1.3 million on a diluted basis, including about $125 million in existing ADVO debt that Valassis expects to refinance. The acquisition will result in the largest integrated media services provider in the country.

    Valassis expects the transaction to be accretive in 2007 on a cash EPS basis, excluding estimated amortization of intangibles arising from purchase accounting. The company anticipates annual cost synergies of about $40 million to be achieved beginning in 2007, and revenue of about $2.65 billion in calendar year 2007.

    "Together, Valassis and ADVO will be well positioned for growth as a more diversified company with complementary capabilities, product offerings and clients," said Alan F. Schultz, Valassis chairman, president, and c.e.o., in a statement. "We will have an unsurpassed ability to deliver value and savings to consumers where, when, and how they want -- and to do so with advanced analytics and targeting capabilities that maximize advertisers' return on investment. This combination is a first in the media services industry, and uniquely positions us to capture growth by anticipating the needs of the marketplace and evolving to meet them."

    Added Chris Linskey, ADVO's v.p. of category sales, grocery, and drug: "The ADVO/Valassis combination is a natural fit. We have expertise with grocery and drug retailers. Valassis is the leader with CPG companies. There are huge synergies possible. Retailers tell us they need to drive customer traffic. The CPG brands say they need to achieve sustainable growth and deliver brand value. Soon we'll be in the enviable position to synchronize the objectives for retailers and the brands. Whether they need targeting expertise, scale, multiple media platforms, or advanced analytics, our combined company will be the go-to source."

    The combined company will be headquartered in Livonia, Mich., and maintain a substantial presence in Windsor, Conn. Schultz will remain chairman, president and c.e.o. and Valassis c.f.o. Robert L. Recchia will also stay on in that position. ADVO c.e.o. S. Scott Harding will serve as a consultant to the combined company. The Valassis board of directors will remain intact.

    ADVO's shared mail distribution business penetrates up to 114 million households, or 90 percent of U.S. homes, significantly augmenting Valassis' weekly newspaper distribution of over 60 million households. The combined company will have 7,900 employees with operations in nine countries.

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