Ross Marowits, THE CANADIAN PRESS

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MONTREAL - Transcontinental Inc. (TSX:TCL.A) says its purchase of a Toronto marketing and brand promotion agency is part of a strategy to develop custom advertising and publishing.

The Montreal-based printing and publishing company didn't disclose how much it's paying for the 130-employee Redwood Custom Communications.

Redwood will complement a newly created marketing communications sector, which provides database analysis, e-mail marketing, printing and other services, Transcontinental said.

"We think it really builds upon our strengths being a publisher and a printer," Isabelle Marcoux, Transcontinental vice-chairwoman and vice president of corporate development, said in an interview.

She said Redwood is a Canadian leader in the development of custom magazines, websites and consumer marketing with annual sales in the tens of millions of dollars.

"It's really expanding our service offering into custom communications that includes custom publishing."

Transcontinental will gain new printing work as it shares the printing of Redwood magazines with Quebecor World (TSX:IQW) and St. Joseph Communications.

Redwood's clients include Aeroplan, the Canadian Automobile Association, Home Depot, Mazda, Procter & Gamble, Sears and Sobeys

Transcontinental paid cash for the 75 per cent of Redwood that was owned by U.S. communications giant Omnicom. Redwood CEO Eric Schneider, who owns 25 per cent, remains an equity partner.

The 44-year-old Schneider said he wanted to join forces with Transcontinental because it shares his vision to grow the business.

"What I have been hankering for is a much more engaged and involved partner," said Schneider, who will continue to lead the acquired operation, which has offices in Toronto and New York.

Uniting several services under one roof will offer customers the ability to better integrate their efforts, he said.

Transcontinental CEO Francois Olivier said the media and printing company's primary goal is to help customers reach and retain their audience.

"Custom communications is at the frontier between traditional publishing and direct marketing, and offers the potential to unlock great value for our clients," he stated.

Transcontinental's marketing communications sector was formally launched last week as part of a corporate restructuring.

Comprised of about $400 million of annual sales and 1,300 employees, it will include printing and graphics specialist the PLM Group.

Redwood was forced to layoff several staff about a year ago after losing the Kraft account, which included the publication of the What's Cooking magazine.

Transcontinental is the largest printer in Canada and sixth-largest in North America, with more than 15,000 employees.

The Montreal-based company, which also publishes magazines and newspapers and has a digital platform and a door-to-door advertising distribution network, had revenue of $2.3 billion last year.

On the Toronto Stock Exchange, Transcontinental shares closed down four cents to $11.25.