Valassis says third-quarter profit fell on weak revenue
Newspaper insert distributor Valassis Communications Inc. said Oct. 26 its third quarter net income fell as a result of weak revenue and costs related to its proposed acquisition of direct mail advertising company Advo Inc. and subsequent lawsuit to rescind the agreement.
Livonia, MI-based Valassis said net earnings in the quarter ended Sept. 30 fell to $6.6 million from $21.3 million in the same quarter a year earlier. Quarterly revenue fell 6.5 percent to $248.9 million.
The company said that during the third quarter, the proposed acquisition of Windsor, CT-based Advo and the lawsuit cost the company $10.1 million.
Valassis filed a lawsuit on Aug. 30 in Delaware Chancery Court seeking to rescind its merger agreement with direct mailer Advo based on allegations of fraud and material adverse changes. A Dec. 11 court date has been set. On Sept. 8, Advo filed a lawsuit in response to Valassis' complaint.
Valassis said that while it has made important progress in some areas of its business, year-to-date, its 2006 performance has fallen short of expectations.