Pittsburgh based Matthews International Corp merging with Schawk Inc.

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The merger of Pittsburgh-based Matthews International Corp. with Schawk Inc., a leading brand development company based in Des Plaines, Ill., will create a global brand solution company with anticipated annual revenues of about $850 million.

Matthews, a 5,800-employee company headquartered on the North Shore that posted 2013 revenue of $985 million, has signed a definitive agreement to acquire Schawk, which reported 2013 sales of $443 million and has about 3,600 employees in 20 countries.

While Matthews is known for manufacturing products for the funeral industry, a substantial portion of its business deals with branding products for major companies such as Colgate and Merck, which is where the acquisition of Schawk will help achieve cost savings and synergies that the companies estimate could add up to about $100 million annually.

"This acquisition fits more in Matthew's brand solutions business," said Joseph C. Bartolacci, president and CEO of Matthews International, during a conference call on Monday with analysts. "Given Schawk's reputation in the U.S. and around the world, we see this as the right choice. The alliance we have made here is significant."

Mr. Bartolacci said Schawk's brands, which includes Schawk!, Anthem and Brandimage, and Matthew's brands all will be branded under the SGK name.

Under the terms of the agreement, shareholders of Schawk, which trades on the New York Stock Exchange under the symbol SGK, will receive $11.80 cash and 0.20582 shares of Matthews common stock for each share Schawk that they own. The transaction, because of the combination of cash and stock, represents an implied price of about $20 for each share of SGK and a total value of about $577 million.

The transaction is expected to close in the quarter ending Sept. 30. The merger still must be approved by shareholders of both companies and the Federal Trade Commission. Several New York-based securities law firms made separate announcements Monday that they are investigating claims that the merger may not be in the best interest of Schawk shareholders.

Founded in 1953, Schawk specializes in graphic design work related to packaging and signage of consumer products. Some of its major clients include Nike and Apple.

"We are excited to be partnering with Matthew International and look forward to capitalizing on the opportunities this transaction will create," said David A. Schawk, CEO of Schawk.

"With Matthews International's trusted reputation in Europe and ours in North America, Europe and Asia Pacific, this alliance is expected to form a stronger global offering and provide greater value to our clients and the markets we serve."

Tim Grant: tgrant@post-gazette.com First Published March 17, 2014 9:39 AM

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