Recently we linked to a New York Times story about a change in strategy at Valassis, the company which last year took over ADVO, the direct advertising concern that is the US Postal Service’s biggest customer. The Times headline read: “Shifting Coupons, From Clip and Save to Point and Click”. A representative from Valassis used our comment feature to clarify the company’s intentions- here’s what he had to say:

There have been some misperceptions about Valassis’s new consumer facing brand, RedPlum, which I’d like to clarify. The RedPlum portal is not replacing our direct mail package, or for that matter, the inserts in newspapers or any of the many advertising vehicles we provide our clients. The purpose of our extension to the Internet is to provide an avenue to reach people who prefer to shop for values on-line. Our goal is to provide consumers with values how, when and where they want, whether that is online, in their mailbox, on their doorstep, with their newspaper or in their store. Valassis is USPS’s largest customer and we value that relationship.

We look forward to continuing our long-standing relationship with the United States Postal Service and appreciate your assistance in helping us to deliver savings and value opportunities to consumers.

Best regards.
Valassis Representative

The Wall Street Journal reports that Valassis, the company that bought ADVO earlier this year in a contentious takeover struggle, has lost half of its market value since the acquisition. While revenue for the combined company was up in the second quarter, profits were down 50%. More importantly from an investor’s point of view, the company had to lower its own earnings expectations, blaming the ‘unpredictability’ of ADVO’s business.

On August 6, Valassis shares hit their lowest price in a decade at $7.67. While the price has risen since then, closing yesterday at $10.28 (half of what it was worth a year ago), the Journal suggests investors aren’t holding their breath waiting for a full recovery: “There are plenty of investors betting the stock price will fall further, with more than 20% of Valassis’s float sold short.”

Not a big surprise- ADVO shareholders today approved the revised acquisition agreement under which the company will be acquired by Valassis. According to the Associated Press, “Valassis will buy all outstanding common shares of Advo for $33 per share in cash, or about $1.08 billion. The company also assume about $125 million in existing Advo long-term debt.”

Valassis, whose acquisition of direct mail giant ADVO was marked by lawsuits and accusations of dirty dealing on both sides, announced Friday that Rob Mason, Valassis Senior Vice President, Retail and Services, will be promoted to President, ADVO Inc., effective at the close of the ADVO deal. Mason will assume general management and profit & loss responsibilities while focusing on sales and marketing efforts.

Also on Friday, Valassis’s stock price jumped almost six percent to 14.62 on Deutsche Bank Securities analyst Paul Ginocchio’s upgrade of the stock from ‘Hold’ to ‘Buy’. Friday’s closing proce is still only half of what the stock was worth a year ago, however. The share price fell sharply in June on lowered earnings estimates, and dropped further in July when the ADVO merger was announced, and still further as the ensuing litigation dragged on.

Dow Jones reports that the judge who will preside over the ADVO/Valassis trial upheld a merger agreement in a similar case in 2001. Judge Leo Strine ruled against Tyson Foods in that case, when it tried to quash an agreement to acquire IBP, claiming that accounting problems at IBP had masked its poor financial future. The story quotes Strine’s decision that in order to invalidate an agreement, fiscal problems need to be ”consequential to the company’s earnings power over a commercially reasonable period,” which he said should be “measured in years rather than months.”

The case is set to go to trial in Delaware Chancery Court on December 11.