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Merrill Corp – ‘PREM14A’ on 8/2/99

On:  Monday, 8/2/99   ·   Accession #:  1047469-99-29383   ·   File #:  0-14082

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 8/02/99  Merrill Corp                      PREM14A                1:637K                                   Merrill Corp/New/FA

Document/Exhibit                   Description                      Pages   Size 

 1: PREM14A     Preliminary Proxy Solicitation Material -- Merger   HTML    667K 
                          or Acquisition                                         

SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934

Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [   ]

Merrill Corporation
(Name of Registrant as Specified in Its Charter)

Merrill Corporation
(Name of Person(s) Filing Proxy Statement)

(1)

Title of each class of securities to which transaction applies: Common Stock, par value $.01 per share, of Merrill Corporation



(2)

Aggregate number of securities to which transaction applies: 15,136,429 shares of Common Stock and 3,166,368 options to purchase shares of Common Stock



(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11: $22.00 per share in cash-out merger plus the difference between $22.00 and the exercise price per share of each option



(4)

Proposed maximum aggregate value of transaction: $360,210,827



(5)

Total fee paid: $72,050.00

(1)

Amount Previously Paid:



(2)

Form, Schedule or Registration Statement No.:



(3)

Filing Party:



(4)

Date Filed:

One Merrill Circle
St. Paul, Minnesota 55108

, 1999

Dear Merrill Shareholder:

You are cordially invited to attend a special meeting of the shareholders of Merrill Corporation to be held on            , 1999, at         , local time, at                      . At this meeting, you will be asked to consider and vote on:

/*/  the merger of Merrill with Viking Merger Sub, Inc., a company controlled by DLJ Merchant Banking Partners II, L.P. and its affiliates; and

/*/  a proposed amendment to Merrill's articles of incorporation to authorize 10 million shares of a new class B common stock (the approval of which is a condition to the merger).

If the merger is completed, you will receive $22.00 in cash for each share of Merrill common stock you own. Merrill, the surviving company in the merger, would become a privately held company and its common stock would no longer be publicly traded. After the merger, Merrill will be owned by DLJMB and its affiliates, as well as John Castro, Merrill's President and Chief Executive Officer, and Rick Atterbury, Merrill's Executive Vice President and Chief Technology Officer, who will continue as Merrill board members and executive officers. Following the merger, Merrill also intends to make available to some of its employees equity plans and other incentives relating to its equity securities.

The attached notice of meeting and proxy statement describe the merger, the merger agreement and the proposed articles amendment. We urge you to read these materials carefully.

An independent special committee formed by Merrill's board of directors in connection with the merger negotiated the $22.00 per share price and other terms of the transaction with Viking. The special committee unanimously approved the merger agreement and recommended that the entire board of directors approve it and submit it to Merrill shareholders for approval.

The board of directors of Merrill, acting on the recommendation of the special committee, unanimously approved the merger agreement (with John Castro and Rick Atterbury abstaining). The special committee and the board of directors believe that the terms and conditions of the merger agreement and the proposed merger are fair to and in the best interests of the Merrill shareholders. Therefore, the board of directors recommends that you vote in favor of the merger proposal.

The merger is an important decision for Merrill and its shareholders. Whether or not you plan to attend the special meeting, I urge you to vote by telephone or via the Internet or complete, date, sign and promptly return the enclosed proxy card to ensure that your shares will be voted at the meeting.

Sincerely,

Paul G. Miller
Chairman of the Special Committee and
of the Board of Directors

This transaction has not been approved or disapproved by the Securities and Exchange Commission nor has the SEC passed upon the fairness or merits of this transaction nor upon the accuracy or adequacy of the information contained in this document. Any representation to the contrary is unlawful.

This proxy statement is being mailed to Merrill shareholders beginning on or about            , 1999.

[LOGO]

One Merrill Circle
St. Paul, Minnesota 55108

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

TABLE OF CONTENTS

APPENDICES

QUESTIONS AND ANSWERS ABOUT THE MERGER

QUESTIONS AND ANSWERS ABOUT VOTING AT THE SPECIAL MEETING

WHO CAN HELP ANSWER YOUR QUESTIONS

    If you have more questions about the merger or would like additional copies of this proxy statement, you should contact:

Investor Relations
Merrill Corporation
One Merrill Circle
St. Paul, Minnesota 55108
Telephone: (651) 646-4501
E-mail address: investor.relations@merrillcorp.com

    The notice of special meeting and proxy statement are also available on our eproxyview Internet site at http://www.eproxyview.com/mrll.

SUMMARY

This summary highlights selected information included in this proxy statement. Because this is a summary, it may not contain all of the information that is important to you. To more fully understand the merger and for a more complete description of the legal terms of the merger, you should read carefully this entire document and the other documents to which we have referred you. The actual terms of the merger are contained in the merger agreement, a copy of which is attached as Appendix A to this proxy statement.

The Companies

Merrill

Merrill Corporation
One Merrill Circle
St. Paul, Minnesota 55108
(651) 646-4501

Merrill provides a full range of typesetting, printing, document management and reproduction, distribution and marketing communication services to financial, legal, investment companies and corporate markets. Our headquarters are in St. Paul, Minnesota, and we have 43 other locations in major cities across the United States, including seven regional printing plants and two distribution centers. Merrill also manages document service centers in various clients' offices in 79 locations. We service financial and corporate printing clients internationally with a strategic relationship in Canada, and through arrangements with printing companies in many cities around the world.

Viking

Viking Merger Sub, Inc.
277 Park Avenue
New York, New York 10172
(212) 892-3000

Viking was incorporated on June 25, 1999 for the sole purpose of completing the merger. It has not carried on any activities to date other than those incident to its formation and completion of the merger. All of the outstanding capital stock of Viking is owned by DLJMB.

The Merger (page 38)

Upon effectiveness of the merger, Viking will be merged with Merrill, and Merrill will continue as the surviving company. In connection with the merger:

/*/  you will be entitled to receive $22.00 in cash for each of your shares of Merrill common stock outstanding at the time of the merger;

/*/  John Castro, Merrill's President and Chief Executive Officer, and Rick Atterbury, Merrill's Executive Vice President and Chief Technology Officer, both of whom are also members of Merrill's board of directors, will:

/-/

continue to hold the shares of a new class B common stock that they will receive shortly before the merger in exchange for some of their shares of Merrill common stock;



/-/

will receive $22.00 in cash for each of their remaining shares of Merrill common stock and a cash payment for cancellation of their outstanding options; and



/-/

will remain directors and executive officers of Merrill;

/*/  the holders of each share of Viking's common stock will be entitled to receive class B common stock in the surviving company for each of their shares of Viking's common stock outstanding at the time of the merger; and

/*/  the holders of each share of Viking's preferred stock or warrants will be entitled to receive preferred stock or warrants, as the case may be, in the surviving company for each of their shares of Viking's preferred
stock or warrants outstanding, as the case may be, at the time of the merger.

Proposed Amendment to Articles (page 38)

Under the terms of the merger agreement, John Castro and Rick Atterbury must retain a certain amount of their interest in Merrill after the merger becomes effective. The merger agreement provides that, just before the merger becomes effective, John Castro and Rick Atterbury must exchange a portion of their shares of Merrill common stock for an equal number of the newly authorized shares of class B common stock. These shares will not convert into cash, but will instead remain outstanding allowing them to participate in the equity of the surviving company going forward.

To establish the class B common stock and permit Messrs. Castro and Atterbury to retain a portion of their interest in Merrill, we need to amend Merrill's articles of incorporation to provide for this class of stock. By voting to approve the merger proposal, you will also be approving an amendment to Merrill's articles of incorporation to authorize the issuance of 10 million shares of this new class B common stock, par value $.01 per share.

The holders of class B common stock will have the same rights and preferences as Merrill's existing common stock except that in the event of a liquidation of Merrill, the holders of the class B common stock would have a liquidation preference of $1.00 per share. A copy of the proposed amendment to our articles of incorporation is attached to this proxy statement as Appendix B. The closing of the merger is conditioned on our shareholders amending Merrill's articles of incorporation to provide for the class B common stock and Messrs. Castro and Atterbury exchanging some of their shares of Merrill common stock for class B common stock.

Vote Required (page 14)

Approval by Merrill's shareholders of the merger proposal will require the affirmative vote of a majority of the outstanding shares of Merrill common stock entitled to vote at the special meeting (          shares).

Consequences of the Merger (page 32)

As a result of the merger:

/*/  Approximately 79.2% of surviving company common stock will be owned by DLJMB and its affiliates, 19.3% by John Castro and 1.5% by Rick Atterbury;

/*/  you will no longer have any interest in, and will no longer be a shareholder of Merrill, and therefore you will not be able to participate in Merrill's future earnings and growth; and

/*/  Merrill's common stock will no longer be traded on the Nasdaq National Market, price quotations will no longer be available and the registration of Merrill's common stock under the Securities Exchange Act of 1934, will terminate.

Recommendations of Merrill's Board of Directors and the Special Committee (page 18)

Merrill's board of directors, based on the unanimous recommendation of the special committee, unanimously approved the merger proposal and recommends that you vote to adopt it. Because of their continuing interest in Merrill after the merger, John Castro and Rick Atterbury refrained from voting on this matter. Merrill's board of directors and the special committee believe that the terms of the merger agreement, including the merger consideration of $22.00 per share, are fair to and in the best interests of Merrill's shareholders.

Reasons for the Merger (page 18)

In reaching its conclusion to approve and recommend the merger agreement, the special committee, in consultation with its legal and financial advisors, considered, among other factors, the following:

/*/  the special committee's knowledge of Merrill's business, operations, properties, assets, financial condition, operating results and prospects;

/*/  the presentations and fairness opinion of CIBC World Markets Corp.

/*/  the fact that the market test conducted by the special committee and CIBC World Markets did not result in any proposal to acquire Merrill;

/*/  the terms and conditions of the merger agreement, including in particular the provisions which permit Merrill's board of directors to:

/-/

consider unsolicited third-party offers;



/-/

negotiate with these third parties;



/-/

furnish these parties non-public information about Merrill; and



/-/

terminate the merger agreement to accept an offer from a third party that is more favorable from a financial point of view than the Viking offer provided Merrill pays Viking a termination fee of $12 million;

/*/  John Castro, Merrill's President and Chief Executive Officer, and Rick Atterbury, Merrill's Executive Vice President and Chief Technology Officer, were willing to agree to vote their shares in favor of the merger proposal pursuant to the terms of a voting agreement with Viking;

/*/  the merger agreement requires that the merger be submitted to Merrill's shareholders for approval and may be terminated in the event this approval is not obtained;

/*/  Minnesota law entitles Merrill shareholders to dissenters' rights if the merger is completed;

/*/  the conditions to closing in the merger agreement, including the financing contingency;

/*/  the experience and success of DLJMB in structuring and closing transactions similar to the merger and the strength and favorable terms of the financing commitment letters provided or obtained by DLJMB for the merger;

/*/  the historical trading prices of Merrill common stock on the Nasdaq National Market and the fact that the consideration to be received by Merrill's shareholders in the merger represents an approximately 25.3% premium to the $17.56 closing price of Merrill common stock on July 14, 1999, the last full trading day before the public announcement of the merger agreement;

/*/  the merger consideration will consist entirely of cash; and

/*/  the special committee's belief that the surviving company (after the merger of Viking into Merrill) will be solvent, will not be left with unreasonably small capital and will not have incurred debts beyond its reasonable ability to pay them as they mature.

Voting Agreement (page 45); Security Ownership of Management (page 59)

John Castro and Rick Atterbury have entered into a voting agreement with Viking which provides that they will vote their shares to approve the merger proposal. The voting agreement is attached as Appendix C to this proxy statement.

In addition, members of our management, including all of our directors and executive officers, have indicated to us that they intend to vote their shares in favor of the merger proposal.

As a result of the voting agreement and these indications, approximately 18.2% of outstanding Merrill common stock will be voted in favor of the merger proposal. Accordingly, an additional 31.9% of outstanding Merrill common stock must be voted in favor of the merger proposal for its approval.

Dissenters' Rights (page 46)

If you do not wish to accept $22.00 per share cash consideration in the merger, you have the right under Minnesota law to dissent from the merger and demand "fair value" for your shares. See pages 46 through 48 and Appendix E to this proxy statement for information on how to exercise your dissenters' rights. Failure to follow all of the steps required by these statutes will result in the loss of your dissenters' rights.

Fairness Opinion of CIBC World Markets (page 21)

CIBC World Markets delivered to the special committee its written opinion, dated July 14, 1999, that the consideration Viking is paying in the merger is fair to Merrill's shareholders (excluding Messrs. Castro and Atterbury) from a financial point of view. This opinion is attached as Appendix D to this proxy statement. We encourage you to read this opinion carefully in its entirety.

Interests of Certain Persons in the Merger (page 28)

In considering the recommendations of the special committee and the board of directors, you should be aware that certain of Merrill's officers and directors have interests in the merger or have certain relationships, including those referred to below, that present actual or potential, or the appearance of actual or potential, conflicts of interest in connection with the merger, including:

/*/  the financial interest of John Castro and Rick Atterbury in Merrill as a result of shares of class B common stock to be received by them shortly prior to the merger in exchange for some of their shares of Merrill common stock;

/*/  the interest of some of Merrill's employees in the equity plans and other incentives relating to the surviving company's equity securities to be adopted and implemented after the merger;

/*/  the voting agreement among Viking, John Castro and Rick Atterbury;

/*/  the interest of certain officers and directors in stock options that will vest upon completion of the merger and entitle the holders to cash payments;

/*/  the right of certain executive officers to severance payments under specified conditions if their employment terminates within two years after the merger is completed;

/*/  the employment agreements that Viking has entered into with John Castro and Rick Atterbury; and

/*/  the indemnification agreements which the directors have entered into with Merrill and the obligation of Viking to cause Merrill to continue to provide certain indemnification and related insurance coverage to directors and officers of Merrill following the merger.

The special committee and the board of directors were aware of these potential or actual conflicts of interest and considered them along with other matters in approving the merger.

Conditions to the Merger (page 42)

The obligations of Merrill and Viking to complete the merger are subject to certain conditions.

Termination of the Merger Agreement (page 43)

The merger agreement may be terminated before the merger is completed, whether before or after approval by the Merrill shareholders, in certain specified events.

Termination Fees (page 44)

Merrill has agreed to pay Viking $12 million in cash if the merger agreement is terminated:

/*/  by Viking, if Merrill's board of directors withdraws, modifies or amends in a manner adverse to Viking its approval or recommendation of the merger, or if the board recommends or endorses an alternative transaction;

/*/  by Merrill, if its board of directors authorizes Merrill to enter into another transaction that is superior to the merger; or

/*/  by Viking, as a result of Merrill's failure to call a special meeting of its shareholders to vote upon the merger proposal or failure to include in this proxy statement the recommendation of our board of directors to approve the merger proposal.

In addition, Merrill must pay Viking $12 million in cash if all of the following events occur:

/*/  Merrill receives an offer to enter into an alternative transaction with a third party before the date of the special meeting;

/*/  the merger agreement is terminated because Merrill's shareholders do not approve the merger or the merger is not completed by December 31, 1999; and

/*/  within 12 months of the termination of the merger agreement, Merrill enters into a transaction (whether or not with that third party) that is superior to the merger.

Financing; Source of Funds (page 36)

The total amount of funds required to (1) fund the payment of the merger consideration and the surrender of outstanding stock options; (2) repay and/or fund our existing indebtedness and other obligations; and (3) pay the fees and expenses in connection with the merger is estimated to be approximately $498.5 million.

Viking intends to obtain these funds from concurrent equity and debt financings, as follows:

/*/  approximately $107.2 million of Viking common and preferred stock will be purchased by DLJMB and its affiliates;

/*/  approximately $245.0 million will be provided to Merrill, as the surviving company after the merger, under a $195.0 million senior secured term loan and a $50 million senior secured revolving credit facility to be arranged by DLJ Capital Funding, Inc.; and

/*/  approximately $190.0 million will be raised through a public offering or private placement of senior subordinated notes or, if unable to raise such funds, through senior subordinated increasing rate notes to be purchased by DLJ Bridge Finance, Inc.

Material Federal Income Tax Consequences (page 34)

You will be taxed on your receipt of the $22.00 in cash per share to the extent that the amount you receive exceeds your tax basis in your shares. Because determining the tax consequences of the merger can be complicated, you should consult your tax advisor in order to understand fully how the merger will affect you.

Shareholder Lawsuits Challenging the Merger (page 37)

Plaintiffs have filed two lawsuits in Minnesota state court on behalf of Merrill shareholders. The lawsuits allege that the board of directors breached their fiduciary duties to Merrill shareholders in approving the merger, and that Merrill shareholders will not receive adequate compensation for their shares of Merrill common stock pursuant to the merger agreement.

The plaintiffs seek to enjoin or rescind the merger, or to recover compensatory damages if the merger is closed and not rescinded. We believe these lawsuits are without merit and intend to defend them vigorously.

CAUTIONARY STATEMENT CONCERNING
FORWARD-LOOKING INFORMATION

This proxy statement and the documents to which we refer you and incorporate into this proxy statement by reference contain forward-looking statements. In addition, from time to time, we or our representatives may make forward-looking statements orally or in writing. We base these forward-looking statements on our expectations and projections about future events, which we derive from the information currently available to us. Such forward-looking statements relate to future events or our future performance, including:

/*/  our financial performance;

/*/  our growth in revenue and earnings;

/*/  our ability to integrate successfully the operations of recent acquisitions into ours;

/*/  our new product and service offerings; and

/*/  our year 2000 readiness.

You can identify forward-looking statements by those that are not historical in nature, particularly those that use terminology such as "may," "will," "should," "expects," "anticipates," "contemplates," "estimates," "believes," "plans," "projected," "predicts," "potential" or "continue" or the negative of these or similar terms. In evaluating these forward-looking statements, you should consider various factors, including:

/*/  risks associated with growth and diversification through acquisitions;

/*/  demand for printed financial documents;

/*/  competitive environment (including existing competition and new competition from electronic printers); and

/*/  year 2000 compliance.

These and other factors may cause our actual results to differ materially from any forward-looking statement.

Forward-looking statements are only predictions. The forward-looking events discussed in this proxy statement, the documents to which we refer you and other statements made from time to time from us or our representatives, may not occur, and actual events and results may differ materially and are subject to risks, uncertainties and assumptions about us. We are not obligated to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this proxy statement, the documents to which we refer you and other statements made from time to time from us or our representatives, might not occur. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

INFORMATION CONCERNING THE SPECIAL MEETING

Date, Time and Place

The special meeting will be held on             , 1999, at    a.m./p.m., local time, at              .

Purpose

At the special meeting, you will be asked to vote upon a proposal to approve and adopt the merger agreement and amend our articles of incorporation to authorize the creation of 10 million shares of a new class B common stock. The phrase "merger proposal" in this proxy statement refers to both the merger agreement and the articles amendment.

A copy of the merger agreement is attached as Appendix A to this proxy statement. A copy of the articles amendment is attached as Appendix B to this proxy statement.

Record Date and Quorum Requirement

We have fixed the close of business on             , 1999 as the record date for the determination of shareholders entitled to notice of, and to vote at, the special meeting. At the close of business on             , 1999, there were shares of our common stock issued and outstanding held by approximately holders of record.

Each holder of record of our common stock at the close of business on             , 1999 is entitled to one vote for each share then held on each matter submitted to a vote of shareholders.

The holders of a majority of the outstanding shares entitled to vote at the special meeting (      shares) must be present in person or represented by proxy to constitute a quorum for the transaction of business. If you vote by proxy card, telephone, Internet or at the special meeting, you will be considered part of the quorum.

Proxies; Revocation of Proxies

You are requested to complete, date and sign the accompanying form of proxy and return it promptly in the enclosed postage-paid envelope. Alternatively, you may vote by telephone, via the Internet or at the special meeting as described under the caption " — Voting Procedures" below.

You may revoke your proxy any time before the special meeting by:

/*/  giving written notice of your revocation to our Secretary;

/*/  filing a revoking instrument or a duly executed proxy bearing a later date with the Secretary;

/*/  voting again by telephone or via the Internet before the special meeting; or

/*/  attending the special meeting and voting in person.

Voting Procedures

Vote by Telephone. You can vote your shares by telephone by calling the toll-free telephone number (at no cost to you) on your proxy card. Telephone voting is available 24 hours a day. Easy-to-follow voice prompts allow you to vote your shares and confirm that your instructions have been properly recorded. Our telephone voting procedures are designed to authenticate shareholders by using individual control numbers. If you vote by telephone, you do not need to return your proxy card.

Vote by Internet. You can also choose to vote via the Internet. The web site for Internet voting is http://www.norwest.eproxy.com/mrll/. You may also link to this site through our eproxyview Internet site at http://www.eproxyview.com/mrll. Internet voting is available 24 hours a day, and will be accessible until     a.m. on              , 1999. As with telephone voting, you will be given the opportunity to confirm that your instructions have been properly recorded. If you vote via the Internet, you do not need to return your proxy card.

Vote by Mail. If you choose to vote by mail, simply mark your proxy card, date and sign it, and return it to Norwest Bank Minnesota, N.A. in the postage-paid envelope provided.

Voting at the Special Meeting. The method by which you vote now will not limit your right to vote at the special meeting if you decide to attend in person. If your shares are held in the name of a bank, broker or other nominee, you must obtain a proxy, executed in your favor, from the holder of record to be able to vote at the special meeting.

How Shares Are Voted. Subject to revocation, all shares represented by each properly executed proxy received by the Secretary of Merrill will be voted in accordance with the instructions indicated thereon, and if no instructions are indicated, will be voted to approve the merger proposal and in such manner as the persons named on the enclosed proxy card in their discretion determine upon such other business as may properly come before the special meeting.

Vote Required

Approval by our shareholders of the merger proposal will require the affirmative vote of a majority of the outstanding shares of our common stock entitled to vote at the special meeting (      shares).

Abstentions and broker "non-votes" are counted as present and entitled to vote for purposes of determining a quorum, and therefore, will have the same effect as a vote "against" the merger proposal. A broker "non-vote" occurs when a bank, broker or other nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner.

If there are insufficient votes to approve the merger proposal at the special meeting, proxies voted in favor of approval of the merger proposal and proxies as to which no voting instructions are given may be voted to adjourn the special meeting in order to solicit additional proxies in favor of approval of the merger proposal. If the special meeting is adjourned for any purpose, at any subsequent reconvening of the special meeting, all proxies will be voted in the same manner as such proxies would have been voted at the original convening of the meeting (except for any proxies which have been revoked or withdrawn), even though they may have been voted on the same or any other matter at a previous meeting.

Voting Agreement; Security Ownership of Management

John Castro and Rick Atterbury have entered into a voting agreement with Viking which provides that they will vote their shares to approve the merger proposal. The voting agreement relates to 1,907,716 Merrill shares owned by Mr. Castro and 277,362 Merrill shares owned by Mr. Atterbury. These shares represent in aggregate 13.6% of our outstanding common stock. The voting agreement also relates to any Merrill shares to which they may become entitled as a result of the exercise of their options to purchase Merrill shares. The voting agreement is attached as Appendix C to this proxy statement and is described in more detail elsewhere in this proxy statement under the caption "The Voting Agreement."

In addition, members of our management, including all of our directors and executive officers, have indicated to us that they intend to vote their shares in favor of the merger proposal.

As a result of the voting agreement and these indications, approximately 18.2% of outstanding Merrill common stock will be voted in favor of the merger proposal. Accordingly, an additional 31.9% of outstanding Merrill common stock must be voted in favor of the merger proposal for its approval.

Voting on Other Matters

If any other matters are properly presented at the special meeting for consideration, the persons named in the proxy will have the discretion to vote on those matters for you. As of the date of this proxy statement, we do not know of any other matter to be raised at the special meeting.

Proxy Solicitation

We bear the cost of soliciting proxies. These costs include the preparation, assembly and mailing of this proxy statement, the notice of special meeting of shareholders and the enclosed proxy card, as well as the cost of forwarding such material to the beneficial owners of Merrill common stock. Our directors, officers and regular employees may, without compensation other than their regular compensation, solicit proxies by telephone, e-mail, facsimile or personal conversation. We may also reimburse brokerage firms and others for expenses in forwarding proxy material to the beneficial owners of common stock. Merrill may decide to retain a proxy solicitation firm for assistance in connection with the solicitation of proxies for the special meeting. If Merrill retains a proxy solicitation firm, Merrill anticipates that the costs it will incur will be approximately $5,000 plus reimbursement of reasonable out-of-pocket expenses.

Electronic Access to Proxy Materials

The notice of special meeting and proxy statement are available on our eproxyview Internet site at http://www.eproxyview.com/mrll.

Please do not send any certificates representing shares of Merrill common stock with your proxy card. If the merger is completed, the procedure for the exchange of certificates representing shares of Merrill common stock will be as described in this proxy statement. We refer you to the sections captioned "The Merger Agreement — Exchange and Payment Procedures" and "The Merger Agreement — Transfers of Shares" contained elsewhere in this proxy statement.

SPECIAL FACTORS

Background of the Merger

Prior to May 1999

On February 24, 1999, William Dawson, on behalf of DLJMB, met with John Castro, Merrill's President and Chief Executive Officer, to suggest that DLJMB sponsor a leveraged buyout of Merrill, together with certain senior members of management. Mr. Dawson and Mr. Castro had ongoing conversations from February 24, 1999 through March 23, 1999.

On March 24, 1999, DLJMB signed a confidentiality agreement in which DLJMB agreed not to disclose confidential information it learned as a result of its due diligence and negotiations with Merrill. Beginning March 29, 1999, DLJMB together with its counsel, accountants and other representatives began its due diligence review of Merrill and its businesses.

May 1999

At a special meeting of the board of directors held on May 17, 1999, Mr. Castro formally advised other members of the board that DLJMB, working in conjunction with members of Merrill senior management, was considering making a proposal to acquire Merrill. In light of the role expected to be played by members of Merrill senior management in any such proposal, the board decided to create a special committee of independent directors to evaluate any such proposal and to negotiate the terms of any such proposal in order to achieve for Merrill shareholders the best price reasonably available to them. Paul G. Miller, Ronald N. Hoge and Michael S. Scott Morton were elected as members of the special committee, with Mr. Miller elected as its Chairman. Shortly thereafter, the special committee retained Dewey Ballantine LLP as its legal advisor and CIBC World Markets as its financial advisor. Frederick W. Kanner, a partner at Dewey Ballantine, is also one of Merrill's directors. In addition, as required by Section 302A.673 of the Minnesota Business Corporation Act, the board of directors also created a committee consisting of all disinterested members of the board, as defined under such section.

In the latter part of May and the early part of June 1999, the special committee, with the assistance of its financial and legal advisors, analyzed Merrill's operations and prospects as an independent company, as well as the universe of other potential buyers which might have an interest in acquiring Merrill. CIBC World Markets identified and provided information regarding a number of strategic and financial buyers that might have an interest in such a transaction.

June 1999

On June 15, 1999, the special committee met with representatives of DLJMB to receive DLJMB's formal acquisition proposal. Representatives of DLJMB gave an overview of the due diligence they had conducted and their thoughts about Merrill's business, and stated that it was prepared to offer $19.00 per share in cash for all of Merrill's outstanding common stock. At that time, the proposal was structured as a two-step acquisition, with a tender offer at $19.00 per share to be followed by a merger for the same consideration. The representatives of DLJMB indicated that members of Merrill's senior management would have a significant equity stake in Merrill following the acquisition and that all of the necessary financing for the transaction had been arranged and would be fully committed, subject to customary conditions. The representatives of DLJMB also outlined other principal terms of their proposal.

The special committee met on the same date with its financial and legal advisors to consider the proposal. After extensive discussion, the special committee rejected the proposal and instructed CIBC World Markets to advise DLJMB that the proposal was inadequate and did not provide a basis for further negotiation. The special committee also instructed CIBC World Markets to approach one potential strategic buyer to determine whether that company had an interest in acquiring Merrill. Shortly thereafter, representatives of that company advised CIBC World Markets that it did not have an interest in an acquisition of Merrill.

On June 18, 1999, DLJMB informed the special committee that DLJMB was prepared to increase its proposal to $21.00 per share. After considering the new proposal from DLJMB, on June 21, 1999, the special committee determined to advise DLJMB that its $21.00 offer was still too low and instructed CIBC World Markets to approach three additional potential strategic buyers to ascertain their level of interest in acquiring Merrill.

On June 23, 1999, the special committee met again to review the status of the transaction. At that meeting, CIBC World Markets reported that DLJMB had indicated that $21.00 was still its offer and that none of the three additional potential strategic buyers was prepared at that time to pursue an acquisition of Merrill, although two of them indicated a desire to give the matter further consideration. Based upon that information, the special committee authorized CIBC World Markets to approach two additional potential strategic buyers to ascertain their level of interest in acquiring Merrill.

The special committee held additional meetings on June 25, June 29 and July 1, 1999 to receive additional information regarding the level of interest expressed by the potential strategic buyers that had been contacted by CIBC World Markets and to formulate a response to DLJMB. During those meetings, representatives of CIBC World Markets reported that none of the strategic buyers it had contacted had indicated a desire to pursue negotiations for a potential acquisition of Merrill. The special committee determined to request full documentation from DLJMB setting forth the remaining terms of its proposal.

July 1999

Following receipt and review of the requested documentation from DLJMB, the special committee determined on July 1, 1999 to deliver a counter-proposal to DLJMB, specifying a price of $23.00 per share and with other suggested modifications to some of the terms proposed by DLJMB.

On July 2, 1999, representatives of CIBC World Markets and Dewey Ballantine met with representatives of DLJMB and its counsel, Davis Polk & Wardwell, for the purpose of clarifying the special committee's counter-proposal. Later that day, DLJMB notified the special committee that while DLJMB was prepared to agree to a number of the points in the counter-proposal from the special committee, it was not prepared to increase its price of $21.00 per share.

Between July 2 and July 8, 1999, representatives of CIBC World Markets continued to discuss the opportunity of acquiring Merrill with those potential strategic buyers previously contacted by CIBC World Markets that had not declined to pursue the opportunity. None of those conversations led to an acquisition proposal or a strong indication of interest in such a proposal. During the same period, negotiations between the special committee and DLJMB continued. In those negotiations, progress was made in resolving a number of issues, but the special committee continued to press for $23.00 per share.

On July 8, 1999, DLJMB made a new proposal that met some of the requirements specified by the special committee (primarily, the maximum amount of a termination fee that would be payable by Merrill if it elected to accept an alternative transaction) and indicated a willingness to increase DLJMB's potential price to $21.25 per share. The special committee considered the new proposal from DLJMB at meetings on July 8 and July 9, 1999. At the same time, the special committee considered but rejected the idea of further expanding the market test that had been conducted for the special committee by CIBC World Markets. Finally, the special committee determined to reject DLJMB's offer of $21.25 per share and to make a counter-offer of $22.00 per share on a "last and best offer" basis. The special committee indicated that it was also prepared to structure the transaction as a one-step transaction, which would allow the transaction to be treated as a recapitalization for accounting purposes.

On July 10, 1999, DLJMB contacted the special committee and advised it that it was prepared to continue negotiations on the basis of a potential price of $22.00 per share if the transaction could be structured as a recapitalization and if satisfactory agreement could be reached on outstanding issues and documentation. Following negotiations of draft agreements, the merger agreement and the voting agreement were executed on July 14, 1999.

Recommendations of the Special Committee and Board of Directors; Reasons for the Merger

At its meeting on July 14, 1999, the special committee determined that the terms of the merger agreement were fair to and in the best interests of the shareholders of Merrill and unanimously recommended the approval of the merger agreement by the board of directors.

At a meeting of the board of directors on July 14, 1999 held after the special committee's meeting on that date, at which all directors of Merrill were present, the board considered the recommendation of the special committee. The board unanimously approved the merger agreement and recommended that the shareholders vote in favor of the merger proposal. Because of their continuing interest in Merrill after the merger, John Castro and Rick Atterbury refrained from voting on this matter.

Special Committee

In reaching its conclusion, the special committee considered the benefits offered by the merger and weighed them against the risks associated with the merger. While the special committee did not consider the risks associated with the merger to be insubstantial, it ultimately concluded that these risks were outweighed by the potential benefits of the merger to Merrill's shareholders. In reaching this determination, the special committee relied, among other things, on the accuracy of the representations and warranties of Viking, the opinions and views of some of Merrill's executive officers and the advice of the special committee's financial and legal advisors.

As described under "Special Factors — Background of the Merger," the special committee was presented with a proposal that offered Merrill shareholders a significant premium over its then current market value. The special committee received an opinion from CIBC World Markets that the proposed consideration to be received by Merrill shareholders (excluding Messrs. Castro and Atterbury) in the merger was fair from a financial point of view to Merrill's shareholders. The decision to recommend that the board of directors approve the merger agreement was based in part on the fact that the market test conducted by the special committee did not result in any proposal to acquire Merrill, and the view of the special committee that the terms of the merger agreement and the related agreements entered into with John Castro and Rick Atterbury were reasonable and would not deter competing bids that were materially better for Merrill's shareholders.

After review and evaluation of all information provided to the special committee for its consideration, consideration of the advice provided by the special committee's financial and legal advisors, and final discussion and deliberation, the special committee concluded that the merger was the best transaction reasonably available to maximize shareholder value. See "Special Factors — Background of the Merger." The factors reviewed by the special committee, in consultation with its legal and financial advisors, included, among others, the following:

/*/  The special committee's knowledge of Merrill's business, operations, properties, assets, financial condition, operating results and prospects, including without limitation Merrill's recent and current financial performance and the implications thereof with respect to the potential market performance of Merrill common stock on a stand-alone basis;

/*/  The oral and written presentations of CIBC World Markets, the fact that the market test conducted by the special committee did not result in any proposal to acquire Merrill and the opinion of CIBC World Markets which is described below. See "Special Factors — Opinion of the Financial Advisor for the Special Committee" for a discussion of the factors that CIBC World Markets considered in rendering its opinion. This opinion, which is subject to limitations, qualifications and assumptions, is included as Appendix D to this proxy statement. We encourage you to read it carefully in its entirety;

/*/  The terms and conditions of the merger agreement. The special committee considered in particular the non-solicitation, termination and termination fee provisions of the merger agreement, which permit Merrill's board of directors to fulfill its fiduciary duties. The special committee sought to negotiate provisions in the merger agreement that would allow the board of directors to fulfill its fiduciary duties in the event an unsolicited offer from a third party were received. While the merger agreement prohibits Merrill from soliciting third-party offers, it does not prohibit the board of directors, where it needs to do so to fulfill its fiduciary duties, from considering unsolicited third-party offers, negotiating with these third parties or furnishing these third parties with information about Merrill, subject to appropriate confidentiality agreements. Also, the special committee negotiated provisions in the merger agreement that would permit the termination of the merger agreement in the event an offer more favorable from a financial point of view than the DLJMB offer is received from a third party. The board of directors concluded that the $12 million termination fee should not deter a third party from making an offer that was more favorable to Merrill's shareholders;

/*/  The fact that John Castro, Merrill's President and Chief Executive Officer, and Rick Atterbury, Merrill's Executive Vice President and Chief Technology Officer were willing to agree to vote their shares in favor of the merger agreement pursuant to the terms of the voting agreement entered into with Viking;

/*/  The merger agreement requires that the merger be submitted to Merrill's shareholders for approval, which allows for an informed vote of shareholders on the merits of the transaction, and may be terminated in the event this approval is not obtained;

/*/  Minnesota law entitles Merrill shareholders to dissenters' rights if the merger is completed;

/*/  The conditions to closing in the merger agreement, including the financing contingency;

/*/  The experience and success of DLJMB in structuring and closing transactions similar to the merger and the strength and favorable terms of the financing commitment letters provided or obtained by DLJMB in connection with the transactions contemplated by the merger agreement, the terms of which had been reviewed and negotiated by the special committee and its representatives and counsel;

/*/  The historical trading prices of Merrill common stock on the Nasdaq National Market and the fact that the consideration to be received by Merrill shareholders in the merger represents an approximately 25.3% premium over the $17.56 closing price of Merrill common stock on July 14, 1999, the last full trading day before the public announcement of the merger agreement;

/*/  The fact that the consideration to be received by Merrill shareholders in the merger will consist entirely of cash; and

/*/  The special committee's belief that the surviving corporation (after the merger of Viking with and into Merrill) will be solvent, will not be left with unreasonably small capital and will not have incurred debts beyond its reasonable ability to pay them as they mature. The receipt of an opinion of an independent financial advisor to the board of directors confirming this belief is a condition to Merrill's obligation to complete the merger.

The foregoing discussion of the information and factors considered and given weight by the special committee is not intended to be exhaustive. In view of the variety of factors considered in connection with its evaluation of the merger, the special committee did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determination. The special committee did not consider Merrill's "liquidation value" in its analysis nor did it consider the book value of Merrill common stock, which as of January 31, 1999 was approximately $8.92 per share (substantially less than the value of the merger consideration). In that regard, the special committee also noted that CIBC World Markets, its financial advisor, did not consider the "liquidation value" or "book value" of Merrill common stock in performing its analysis in rendering its fairness opinion. In addition, individual members of the special committee may have given different weights to different factors.

Board of Directors

The board of directors unanimously formed the special committee to act solely on behalf of Merrill's unaffiliated shareholders for purposes of negotiating the merger agreement and considering the merger. The special committee, in turn, retained CIBC World Markets to prepare and deliver an opinion as to the fairness of the merger consideration to the Merrill shareholders (excluding Messrs. Castro and Atterbury) from a financial point of view.

In reaching its determination referred to above, the board of directors considered and relied upon:

/*/  the process conducted by the special committee in considering the merger (including the market test conducted by the special committee);

/*/  the special committee's conclusions, recommendations and unanimous approval concerning the merger agreement and the transactions contemplated thereby;

/*/  the special committee's declaration of the merger agreement's advisability; and

/*/  the opinion of CIBC World Markets that, as of the date of such opinion, based upon and subject to various considerations, assumptions and limitations stated therein, the $22.00 per share in cash to be received by Merrill's shareholders in the merger was fair to such shareholders (excluding Messrs. Castro and Atterbury) from a financial point of view, and the related analyses presented by CIBC World Markets.

The board of directors believes that sufficient procedural safeguards to ensure fairness of the transaction and to permit the special committee to effectively represent the interests of Merrill's shareholders (excluding Messrs. Castro and Atterbury) were present. The merger was approved by all of the directors of Merrill who are not employees of Merrill. These non-employee directors believed there was no need for them to retain any additional unaffiliated representative to act on behalf of the holders of Merrill common stock or to require the approval of at least a majority of unaffiliated holders of Merrill common stock. The board of directors reached this conclusion in view of:

/*/  the fact that the special committee consisted of disinterested directors (none of whom will be directors or investors in the surviving company or DLJMB) whose sole purpose was to represent the interests of Merrill's shareholders (excluding Messrs. Castro and Atterbury);

/*/  retention by the special committee of independent legal counsel and financial advisors;

/*/  the fact that the special committee, even though consisting of directors of Merrill and therefore not completely unaffiliated with Merrill, is a mechanism well recognized to provide for fairness in transactions of this type; and

/*/  the fully arms' length negotiations that had taken place between DLJMB and the representatives of the special committee.

Based primarily upon the recommendation of the special committee, the board of directors unanimously approved the merger agreement and transactions contemplated thereby and unanimously recommends that you vote in favor of the merger proposal. Because of their continuing interest in Merrill after the merger, John Castro and Rick Atterbury refrained from voting on this matter.

Benefits and Detriments to Merrill Shareholders

We believe that the merger will result in benefits to you by allowing you to realize the value of your investment in Merrill in cash at a price which represents a significant premium to the market price for Merrill common stock before the announcement of the merger agreement, and eliminate the risk of a decline in the value of your investment in Merrill. The merger consideration of $22.00 per share represents a 25.3% premium over the $17.56 closing price of Merrill common stock on July 14, 1999, the day the merger agreement was announced.

The primary detriment to you of the completion of the merger is that you will cease to have any ownership in Merrill and will cease to participate in Merrill's future earnings or growth, if any, or benefit from increases, if any, in Merrill's value. In addition, you may recognize a taxable gain as a result of the merger.

Opinion of the Financial Advisor for the Special Committee

The special committee of the board of directors retained CIBC World Markets on May 24, 1999 to act as its financial advisor and to identify potential acquirers in connection with its consideration of a possible sale of the assets or securities of Merrill. The special committee also retained CIBC World Markets to render an opinion as to the fairness, from a financial point of view, of the consideration to be received by Merrill shareholders from the merger. This opinion was not given with respect to the class B common stock that Messrs. Castro and Atterbury will receive in the merger.

Selection of CIBC World Markets. The special committee based its decision to retain CIBC World Markets upon CIBC World Markets' knowledge of the printing industry and qualifications, expertise and experience as an investment banking and financial advisory firm. CIBC World Markets, as part of its investment banking business, is regularly engaged in the business of providing valuations of businesses and securities in connection with mergers and acquisitions, underwritings, secondary distributions of securities, private placements and valuations for other purposes.

Fairness Opinion. On July 14, 1999, CIBC World Markets made a presentation to the special committee stating that as of July 14, 1999, based on the terms of the consideration to be received by shareholders, excluding Messrs. Castro and Atterbury, such consideration was fair from a financial point of view. CIBC World Markets subsequently delivered its written fairness opinion confirming the oral fairness opinion that had been given to the special committee on July 14, 1999.

The full text of the fairness opinion, which sets forth assumptions made, procedures followed and matters considered by CIBC World Markets, is attached as Appendix D to this proxy statement.

Assumptions; Information Received. CIBC World Markets relied upon and assumed the accuracy and completeness of all of the financial and other information available to it from public sources and provided to it by Merrill. Representatives of Merrill provided CIBC World Markets with financial forecasts for such purpose. Merrill representatives advised CIBC World Markets, and CIBC World Markets has assumed, that such forecasts and other data were reasonably prepared on a basis reflecting Merrill's best currently available estimates and judgment as to Merrill's future financial performance.

In arriving at its opinion, CIBC World Markets did not receive any independent evaluation or appraisal of Merrill's assets or liabilities. CIBC World Markets also assumed, without independent evaluation, the accuracy of the advice and conclusions of the parties' legal counsel and accountants with respect to tax and accounting matters. The fairness opinion was necessarily based on information available to CIBC World Markets and on general economic, financial and stock market conditions and circumstances as they existed and could be evaluated by CIBC World Markets as of July 14, 1999. Neither Merrill, the special committee nor the board of directors imposed any limitations on CIBC World Markets or the investigations made or procedures followed by CIBC World Markets.

The following is a summary description of the written fairness opinion received from CIBC World Markets. Because it is a summary, it does not include all of the information that is included in the written fairness opinion. The opinion is attached as Appendix D to this proxy statement and incorporated herein by this reference. We urge you to read this opinion carefully in its entirety for the assumptions made, the matters considered and the limits of the review by CIBC World Markets. The fairness opinion is directed only to the fairness, from a financial point of view, to Merrill's shareholders (excluding Messrs. Castro and Atterbury) of the consideration to be received by Merrill shareholders under the merger agreement. The fairness opinion does not address any other aspect of the merger agreement. The fairness opinion does not constitute a recommendation as to how any shareholder should vote with respect to the merger proposal.

In rendering the fairness opinion, CIBC World Markets:

/*/  reviewed a draft of the merger agreement dated July 14, 1999;

/*/  reviewed Merrill's audited financial statements for the fiscal years ended January 31, 1997 through January 31, 1999;

/*/  reviewed Merrill's unaudited financial statements for the three months ended April 30, 1999 and the unaudited financial statements for the month ended May 31, 1999;

/*/  reviewed Merrill's financial projections prepared by its management;

/*/  held discussions with Merrill's senior management about the company's business, capital requirements and prospects of future growth;

/*/  reviewed publicly available information about Merrill, including the historical market prices and trading volume for Merrill common stock;

/*/  reviewed and analyzed financial data for certain companies that CIBC World Markets deemed comparable;

/*/  reviewed and analyzed certain publicly available financial information for precedent transactions that CIBC World Markets deemed comparable to the merger;

/*/  performed a discounted cash flow analysis using certain assumptions of future performance provided to and discussed with CIBC World Markets by Merrill management;

/*/  at the request of the special committee, held confidential discussions with certain third parties to solicit indications of interest in the possible acquisition;

/*/  at the request of the special committee, held discussions with representatives of affiliates of DLJMB with respect to the terms of the merger; and

/*/  performed such other analyses and reviewed such other information as CIBC World Markets deemed appropriate for the purposes of such opinion.

Valuation of Merrill. CIBC World Markets performed four primary valuation analyses:

/*/  a comparable public companies analysis, which consisted of reviewing and considering certain financial and stock market data for certain publicly traded companies engaged in businesses deemed by CIBC World Markets to be similar to Merrill's business;

/*/  a precedent transactions analysis, which consisted of reviewing certain financial data of selected comparable acquisitions involving companies engaged in businesses deemed by CIBC World Markets to be similar;

/*/  a discounted cash flow analysis; and

/*/  a leveraged buyout analysis.

In establishing the range of values resulting from the application of each of these analyses, CIBC World Markets made qualitative judgments as to the meaningfulness of the valuation measurements. These judgments were based on a comparable analysis of the financial performance and the growth prospects between Merrill and the comparable companies, the number and similarity of comparable transactions, as well as the predictability and volatility of future earnings when assessing the relative significance of the discounted cash flow analysis. The comparable public companies analysis formed the primary basis for the selection of appropriate valuation multiples; however, certain other valuation measurements, as used generally for comparative purposes, were also taken into account in making such judgments.

Comparable Public Companies Analysis. CIBC World Markets compared Merrill to the following six public companies engaged in businesses deemed by CIBC World Markets to be similar. The companies are referred to in this section as the "comparable companies." They are:

/*/  Banta Corporation;

/*/  Big Flower Holdings, Inc.;

/*/  Bowne & Co., Inc.;

/*/  R.R. Donnelley & Sons Co.;

/*/  Quebecor Printing Inc.; and

/*/  World Color Press, Inc.

Using publicly available information, CIBC World Markets analyzed, among other things, a range of market multiples of the comparable companies, including:

/*/  enterprise value (defined as market value of common equity plus book value of total debt and preferred stock less cash) as a multiple of latest reported 12 months ("LTM") revenues, earnings before interest, taxes, depreciation and amortization ("EBITDA") and earnings before interest and taxes ("EBIT"); and

/*/  price to earnings ratios based on LTM net income and estimated fiscal year 2000 earnings per share.

In making these comparisons, CIBC World Markets examined multiples of LTM revenue, LTM EBITDA, LTM EBIT, LTM net income and estimated fiscal year 2000 earnings per share. The multiples CIBC World Markets deemed most relevant, under the comparable public companies analysis, were LTM EBITDA, LTM net income and estimated fiscal year 2000 earnings per share.

The comparable companies had (1) an LTM EBITDA multiple range of 5.0x to 7.3x; (2) an LTM net income multiple range of 13.0x to 17.8x; and (3) an estimated fiscal year 2000 earnings per share multiple range of 11.1x to 16.2x.

Based on Merrill's net debt of $108.2 million as of May 31, 1999, CIBC World Markets concluded that (1) the equity value per share range for Merrill shares implied by the LTM EBITDA multiples was approximately $15.74 to $26.01; (2) the equity value per share range for Merrill shares implied by the LTM net income multiples was approximately $20.69 to $28.33; and (3) the equity value per share range for Merrill shares implied by the estimated fiscal year 2000 earnings per share multiples was approximately $18.32 to $26.73.

Precedent Transactions Analysis. Using publicly available information, CIBC World Markets analyzed the consideration paid in selected merger and acquisition transactions involving companies in businesses deemed by CIBC World Markets to be similar to Merrill. CIBC World Markets examined the following 32 transactions:

/*/  World Color Press, Inc./Quebecor Printing Inc. (pending);

/*/  Big Flower Holdings, Inc./Thomas H. Lee Company and Evercore Capital Partners (pending);

/*/  The Boston Trade Press, Inc./Cunningham Graphics International, Inc.;

/*/  Communicolor (division of Standard Register Co.)/R.R. Donnelley & Sons Company;

/*/  The Workable Company Limited/ Cunningham Graphics International, Inc.;

/*/  Roda Limited/Cunningham Graphics International, Inc.;

/*/  Rapidforms, Inc./New England Business Service, Inc.;

/*/  Judd's Incorporated/PPC Holdings, Inc.;

/*/  Western Graphics/Mail-Well Inc.;

/*/  Graphic Industries, Inc./ Wallace Computer Services, Inc.;

/*/  Riverside County Publishing Co./Big Flower Press Holdings, Inc.;

/*/  Franklin Division of Brown Printing Co./Quebecor Printing Inc.;

/*/  Data Documents Inc./Corporate Express Inc.

/*/  Graftek Press, Inc./BGJ Enterprises, Inc.;

/*/  Petty Co./Quebecor Printing Inc.;

/*/  Rand McNally Book Services Group/World Color Press, Inc.;

/*/  AmerSig Graphics/Quebecor Printing Inc.;

/*/  Vanier Graphics Corporation/The Reynolds & Reynolds Company;

/*/  Leigh-Mardon Security Group/American Banknote Corp.;

/*/  Scanforms, Inc./Big Flower Press Holdings, Inc.;

/*/  Printco/Big Flower Press Holdings, Inc.;

/*/  Ringier America/World Color Press, Inc.;

/*/  Lancaster Press/Cadmus Communications Corp.;

/*/  The Corporate Printing Company/Merrill Corporation;

/*/  FMC Resource Management/Merrill Corporation;

/*/  Webscraft Technologies, Inc./Big Flower Press Holdings, Inc.;

/*/  Eagle Lithographing Co./Quebecor Printing Inc.;

/*/  New England Book Components, Inc./Phoenix Color Corp.;

/*/  The Software Factory/Cadmus Communications Corp.;

/*/  Northeast Graphics, Inc./World Color Press, Inc.;

/*/  Waverly Press/Cadmus Communications Corp.; and

/*/  The Alden Printing Company/APC Holding (World Color Press, Inc.).

In this analysis, earnings and EBITDA multiples were calculated based upon the respective purchase prices paid in comparable transactions and the most recently available 12 months of financial data for the target company prior to its acquisition. A comparative analysis of size, financial performance and growth prospects between Merrill and the target companies in the publicly disclosed merger and acquisition transactions formed the basis for the selection of the appropriate multiples. CIBC World Markets examined multiples of LTM revenue, LTM EBITDA and LTM EBIT. The multiple CIBC World Markets deemed most relevant was LTM EBITDA.

The comparable transactions had an LTM EBITDA multiple range of 5.5x to 8.6x. Based on Merrill's net debt of $108.2 million as of May 31, 1999, CIBC World Markets concluded that the equity value per share range for Merrill shares implied by the LTM EBITDA multiples was approximately $17.97 to $31.82.

Discounted Cash Flow Analysis. The discounted cash flow valuation is based on the assumption that the value of a business can be determined with reference to the present value of the future cash flow that the assets will generate for their owners. To establish a current value under this approach, future cash flow must be estimated and an appropriate discount rate determined. CIBC World Markets performed a discounted cash flow analysis of Merrill's projected after-tax cash flow for the years ending January 31, 2000 through 2004, based on forecasts and other data provided by Merrill management. A provision for Merrill's value at the end of the forecast period (a "terminal value") was made by applying a range of EBITDA multiples of 5.5x, 6.5x and 7.5x to Merrill's projected EBITDA for the fiscal year ending January 31, 2004. These multiples are generally consistent with the comparable transactions in the industry. The present value of the interim cash flows and the terminal value was then determined using a risk-adjusted rate of return (a "discount rate"). For purposes of such analysis, CIBC World Markets used discount rates of 15.0%, 16.0% and 17.0%. The discounted cash flow analysis resulted in an equity value per share range for Merrill common stock of $29.53 to $38.95, based on an estimated $108.2 million in debt as of May 31, 1999.

Leveraged Buyout Analysis. In order to estimate, based on CIBC World Markets' reasonable judgment, an overall per share value for Merrill, CIBC World Markets prepared a leveraged buyout analysis. CIBC World Markets relied, at the request of Merrill management, without independent verification, upon forecasted financial information. The leveraged buyout analysis assumed management projections for the years 2000 through 2005 and a capitalization structure similar to the one proposed by Viking. The analysis was performed assuming a range of required rates of return to the equity sponsor of 35.0% to 45.0% and a range of EBITDA exit multiples of 5.5x to 7.5x. The analysis produced an equity value per share range for Merrill common stock of $21.58 to $24.71. CIBC World Markets noted that the consideration to be offered in the merger compared favorably with the range of implied equity values per share calculated in the leveraged buyout analysis.

Conclusions. The table below summarizes the results of the four valuation analyses performed by CIBC World Markets:

Limitations. The summary set forth above is not a complete description of the analysis performed by CIBC World Markets in performing its valuation of Merrill common stock. The preparation of a fairness opinion involves various determinations as to the most appropriate and relative methods of financial analysis and the application of these methods to particular circumstances and, therefore, such an opinion is not readily susceptible to summary description.

CIBC World Markets was selected to act as financial advisor to the special committee, based upon its qualifications, expertise and reputation. CIBC World Markets, as a customary part of its investment banking business, is engaged in the evaluation of businesses and their securities in connection with mergers and acquisitions, private placements and valuations for estate, corporate and other purposes.

The above analyses were prepared by CIBC World Markets solely for the purposes of providing its opinion as to the fairness from a financial point of view of the consideration proposed to be paid under the merger agreement to Merrill shareholders (excluding Messrs. Castro and Atterbury). Analyses based on forecasts of future results are inherently subject to substantial uncertainties and are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by such analyses. Additionally, analyses relating to the value of the businesses do not purport to be appraisals or to reflect the prices at which businesses may actually be sold or combined. As described above, CIBC World Markets' opinion and presentation to the special committee was one of the many factors taken into consideration by the special committee in making its determination to recommend approval of the merger agreement to the board of directors and should not be viewed as determinative of the views of the special committee or management with respect to the consideration under the merger agreement.

Interests of CIBC World Markets in the Merger. In connection with the merger, the special committee entered into an engagement letter with CIBC World Markets for the rendering of financial advisory and investment banking services to the special committee for a possible sale transaction and to provide a fairness opinion. In connection with the engagement, Merrill, on behalf of the special committee, agreed to pay CIBC World Markets:

/*/  a $1.25 million transaction fee if a transaction is completed that involves Merrill management members and an affiliate of Donaldson, Lufkin & Jenrette (referred to as a "DLJ transaction"), against which will be credited a (1) $100,000 engagement fee paid upon execution of the engagement letter and (2) $500,000 opinion fee paid upon the rendering of the fairness opinion to the special committee; or

/*/  a minimum fee of $2.0 million if a transaction other than a DLJ transaction is completed, against which the $100,000 engagement fee and the $500,000 opinion fee will be credited.

The engagement letter also provides that Merrill will reimburse CIBC World Markets for its reasonable out-of-pocket expenses incurred in connection with the performance of its services and will indemnify CIBC World Markets and certain related persons against certain potential liabilities. These liabilities include liabilities arising out of the engagement of CIBC World Markets by the special committee, including liabilities under the federal securities laws.

In the ordinary course of its business, CIBC World Markets may actively trade Merrill securities for its own account or for the accounts of its customers and, accordingly, may at any time hold a long or short position in Merrill securities.

Viking's Purpose; Reasons for and Structure of the Merger

Viking's Purpose. The purpose of the merger is for Viking and DLJMB to obtain control of Merrill, while providing Merrill shareholders with the opportunity to liquidate their investment in Merrill for cash at a price representing a significant premium to market prices for Merrill common stock before the public announcement of the merger agreement.

Viking's Reasons for and Structure of the Merger. As noted above, in March 1999, following contacts with John Castro, DLJMB began to explore the possibility of sponsoring a leveraged buyout of Merrill and performed an evaluation of Merrill as a potential investment candidate. As a result of such evaluation, DLJMB concluded that Merrill might be an attractive candidate for a possible investment.

Before reaching its decision to pursue the merger, DLJMB considered various alternatives to the merger, including: a two-step acquisition of Merrill, consisting of a first step tender offer and a second step merger. The primary benefit to DLJMB of the two-step acquisition alternative was the potential to acquire control of Merrill in a short time period. The benefits of this alternative were less significant, however, than the accounting treatment the surviving company will expect to realize as a result of the one-step structure described below.

The transaction is structured so as to be accounted for as a recapitalization. One of the requirements for a merger to qualify for recapitalization treatment is that a certain portion of the outstanding equity securities of the recapitalized company remain outstanding. The shares of class B common stock that John Castro and Rick Atterbury will receive in the exchange immediately before the merger which will remain outstanding after the merger will satisfy this requirement.

The benefits of the merger to Viking and DLJMB are:

/*/  the acquisition of control of a company that it has assessed has certain inherent qualities; and

/*/  the transaction is structured so as to be accounted for as a recapitalization.

The detriments to the completion of the merger to Viking are:

/*/  the significant cash outlay required by Viking and DLJMB to complete the merger; and

/*/  the surviving company's inability to use publicly traded securities as acquisition capital.

Position of Viking and DLJMB

As described in more detail under "Special Factors — Background of the Merger," the terms of the merger agreement and the voting agreement were negotiated at arms' length among Merrill, DLJMB and Messrs. Castro and Atterbury. DLJMB and Viking did not independently consider the fairness of the merger consideration to Merrill's shareholders. Based exclusively on the evaluation of the merger by the special committee, and its financial advisor, and the board of directors, including a review of the description in this proxy statement of the information and factors considered by each of them in concluding that the terms of the merger agreement are fair to and in the best interests of Merrill's shareholders (excluding Messrs. Castro and Atterbury), DLJMB and Viking believe that the terms of the merger agreement are fair to and in the best interests Merrill's shareholders (excluding Messrs. Castro and Atterbury).

While there may be some detriments to Merrill shareholders as a result of the merger, such as ceasing to have an interest in Merrill's future growth, if any, going forward, Merrill's shareholders will benefit from the merger, if it is approved, since the merger consideration to be paid to the shareholders represents a significant premium over the market price of Merrill's shares prior to the public announcement of the merger agreement. Neither DLJMB nor Viking received any report, opinion or appraisal from an outside party which is materially related to the merger agreement or the merger. In particular, neither DLJMB nor Viking received any report, opinion or appraisal relating to the fairness of the merger agreement and the merger to Merrill or its shareholders.

Interests of Certain Persons in the Merger; Certain Merrill Benefit Plans; and Continued Ownership of Merrill After the Merger

General. In considering the recommendation of the special committee and the board of directors, you should be aware that certain of Merrill's officers and directors have interests in the merger or have certain relationships, including those referred to below, that present actual or potential, or the appearance of actual or potential, conflicts of interest in connection with the merger. The special committee and the board of directors were aware of these potential or actual conflicts of interest and considered them along with other matters described under "— Recommendation of the Special Committee and the Board of Directors; Reasons for the Merger."

Continuing Ownership. Under the terms of the merger agreement, John Castro and Rick Atterbury will retain a certain amount of their interest in Merrill after the merger becomes effective. The merger agreement provides that just before the merger becomes effective, John Castro and Rick Atterbury must exchange a portion of their shares of Merrill common stock for an equal number of the newly authorized shares of class B common stock. The process of exchanging some of their shares of Merrill common stock for class B shares allows them to retain an equity interest through the merger without suffering adverse tax consequences.

John Castro intends to exchange 909,091 shares, representing approximately 47.65% of the Merrill shares that he currently owns. Rick Atterbury intends to exchange 70,000 shares, representing approximately 25.24% of the Merrill shares that he currently owns. As a result of these exchanges, immediately after the merger is completed John Castro and Rick Atterbury will own in the aggregate approximately 20.8% of Merrill.

In addition, following the merger, Merrill intends to make available to some of its employees equity plans and other incentives relating to its equity securities. It is contemplated that the equity plans will involve the availability of non-recourse loans to participating employees. At this time, there has been no final determination of the scope of the plans.

Pre-Merger Sale of Castro and Atterbury Shares. It is contemplated that prior to the merger, John Castro and/or Rick Atterbury will sell to DLJMB their shares of Merrill common stock that are not to be exchanged for class B common stock. They will receive from DLJMB $22.00 in cash for each share sold.

Voting Agreement. John Castro and Rick Atterbury have entered into a voting agreement with Viking which provides that they will vote their shares to approve the merger proposal. The voting agreement relates to an aggregate 13.6% of Merrill's outstanding common stock and any shares to which either Messrs. Castro or Atterbury may become entitled upon the exercise of their options.

Treatment of Options. Certain directors, officers and employees have received options to acquire shares of Merrill common stock under various Merrill stock plans.

The table below shows the number of options currently held by each of Merrill's executive officers and directors, and all other individuals as a group, and the amounts to be paid to these individuals at the effective time of the merger in exchange for cancellation of these options.

The actual amounts to be paid to these persons will be reduced by any applicable federal and state income and payroll tax withholding. In addition, to the extent the acceleration of the vesting of the options or the payment of cash in exchange for all or part of the options, together with any other payment the optionholders have the right to receive from Merrill would constitute an "excess parachute payment" under Section 280G of the Internal Revenue Code, then the payments will be reduced so they will not be subject to any excise tax imposed by Section 4999 of the Internal Revenue Code. The payments will not be reduced, however, if the optionholder is subject to a separate agreement with Merrill that provides otherwise.

Severance Arrangements. The proposed merger would be deemed to be a "change in control" under change in control agreements entered into in May 1998 with John Castro, Rick Atterbury, Kay Barber, Steven Machov and Kathleen Larkin. Under these agreement, all of these executive officers, except Messrs. Castro and Atterbury, who have entered into separate employment agreements with Viking which will become effective upon completion of the merger as described below, would be entitled to receive certain benefits if they are terminated either:

/*/  within 24 months of the effective date of the merger; or

/*/  before the effective date of the merger if the termination was either a condition to the merger or was at the request or insistence of a person related to the merger.

Executives are not considered "terminated" for purposes of these agreements if they die or are terminated for cause. An executive is, however, considered "terminated" if the executive voluntarily leaves Merrill's employ for "good reason." "Good reason" means:

/*/  an adverse and material change in title, status, position, authority, duties or responsibilities as an executive;

/*/  reduction in base salary or an adverse change in the form or timing of the payment of such salary;

/*/  failure to cover the executive under similar benefit plans at a substantially similar total cost to the executive (including equity based plans);

/*/  relocation to more than 30 miles from the executive's existing office;

/*/  failure to obtain a successor's consent to the change in control agreement;

/*/  any termination of employment not properly noticed; or

/*/  our refusal to allow the executive to continue to attend to matters or engage in activities not directly related to our business.

The executive is entitled to receive the following payments and benefits upon the triggering of these agreements:

/*/  cash payment equal to two times (three times in the case of Messrs. Castro and Atterbury) the sum of the executive's (1) base salary plus (2) target cash bonus for the year during which the change in control occurs or the average of the cash bonus for the three fiscal years ending immediately before the change in control, whichever is greater;

/*/  medical, dental and vision benefits to the executive, his or her family members and dependents for two years (three years for Messrs. Castro and Atterbury) after the "date of termination" of employment, at a substantially similar total cost to the executive;

/*/  full vesting and non-forfeitability of the executive's account balance under Merrill's Supplemental Executive Retirement Plan. In addition, we will cause all distributions under this plan to be made regardless of the provisions of the plan that permit such distributions to be deferred; and

/*/  cash payment, if any, sufficient to cover all tax obligations arising from excise taxes.

These change in control agreements have a term ending January 1, 2000. However, the agreements will automatically renew for additional 12-month periods unless Merrill gives the executive 90 days' advance notice of its intent to terminate the agreements. In addition, if a "change in control" occurs during the term of the agreements, the agreements will continue for an additional 24 months.

The following table illustrates the amount of the lump sum payments that the executives would be entitled to receive if they were terminated within six months after the effective date of the merger, assuming the effective date was October 31, 1999:

The above amounts exclude:

/*/  costs associated with medical, dental and vision benefits;

/*/  cash payments for tax obligations arising from excise taxes, if any; and

/*/  the amount of the executive's vested benefits under the Supplemental Executive Retirement Plan.

In addition to the change in control agreements described above, Merrill intends to enter into similar severance arrangements with its other executive officers. The terms of these severance arrangements, however, have not been finalized.

Employment Agreements. Viking has entered into employment agreements with John Castro and Rick Atterbury which will become effective upon the completion of the merger. These employment agreements replace the current employment and change in control agreements between Merrill and each of these executives. Under these new employment agreements, if Mr. Castro or Mr. Atterbury is terminated without cause, he will receive:

/*/  a lump sum payment equal to 2.99 times his annual base salary;

/*/  a lump sum payment equal to 2.99 times his average bonus over the three consecutive years immediately before his termination; and

/*/  continuation of all insurance and other benefits for a period of three years.

In addition, his entire account balance and all accrued benefits under Merrill's Supplemental Executive Retirement Plan and those under our other plans or arrangements providing similar benefits will vest and become nonforfeitable as of the termination date.

The following table illustrates the amount of the lump sum payments that Messrs. Castro and Atterbury would be entitled to receive if they were terminated within six months after the effective date of the merger, assuming the effective date was October 31, 1999:

The above amounts exclude:

/*/  costs associated with medical, dental and vision benefits;

/*/  cash payments for tax obligations arising from excise taxes, if any; and

/*/  the amount of the executive's vested benefits under the Supplemental Executive Retirement Plan.

Should either Mr. Castro or Mr. Atterbury receive any payments under his employment agreement in connection with a change of control he would be entitled to a gross-up payment intended to offset the effect of any excise tax owed under Section 4999 of the Internal Revenue Code.

In addition, these employment agreements provide Messrs. Castro and Atterbury with compensation similar to the compensation they currently receive under their existing employment agreements.

Other Employment Arrangements. The merger agreement provides that, for a period of at least one year following the effective time of the merger, the surviving company will provide benefits to its employees which will, in the aggregate, be comparable to those currently provided by Merrill to its employees (other than any stock option or other equity based incentive plan currently provided by Merrill).

Indemnification and Insurance. Pursuant to the merger agreement, for six years after the closing date of the merger, Viking will cause Merrill to indemnify and hold harmless Merrill's present and former officers and directors for acts or omissions occurring before the close of the merger to the extent provided under Merrill's articles of incorporation and by-laws in effect on the date of the merger agreement. For six years after the close of the merger, Viking will cause Merrill to provide officers' and directors' liability insurance for acts or omissions occurring before the close of the merger covering each such person currently covered by Merrill's officers' and directors' liability insurance policy on terms with respect to coverage and amount no less favorable than those of such policy in effect on July 14, 1999; provided, that the cost of such insurance will not exceed 200% of the amount per annum we paid in our last fiscal year.

Board Indemnification Agreements. In May 1999, Merrill entered into compensation and indemnification agreements with each of the members of the special committee, Paul G. Miller, Ronald N. Hoge and Michael S. Scott Morton, to compensate them for their additional duties, responsibilities and burdens in connection with their service on the special committee. In return for their services as a members of the special committee, each of Messrs. Miller, Hoge and Scott Morton are entitled to receive $25,000. Merrill will also reimburse them for any reasonable out-of-pocket travel and other expenses incurred in connection with their service on the special committee. In addition to their general right to indemnification under Merrill's articles of incorporation, Merrill agreed to indemnify and advance expenses to each of them to the full extent provided by applicable law and Merrill's articles of incorporation in connection with any threatened, pending or completed proceeding, including a proceeding by or in the right of the company.

Merrill also entered into indemnification agreements with each of its disinterested members of the board of directors to compensate them for their additional duties, responsibilities and burdens in connection with their service on the board in considering the proposed merger transaction. In addition to their general right to indemnification under Merrill's articles of incorporation, Merrill also agreed to indemnify and advance expenses to each of them to the full extent provided by applicable law and Merrill's articles of incorporation in connection with any threatened, pending or completed proceeding, including a proceeding by or in the right of the company.

Legal Counsel. Richard G. Lareau, a member of Merrill's board of directors, is a partner in the law firm of Oppenheimer Wolff & Donnelly LLP which provided legal services to Merrill in connection with the merger transaction. Frederick W. Kanner, a member of Merrill's board of directors, is a partner in the law firm of Dewey Ballantine LLP, which provided legal services to the special committee in connection with the merger transaction.

Consequences of the Merger

Pursuant to the merger agreement, following approval of the merger proposal and subject to the fulfillment or waiver of certain conditions, Viking will be merged with Merrill, and Merrill will continue as the surviving company in the merger. As a result of the merger, you will be entitled to receive $22.00 in cash for each of your shares of Merrill common stock outstanding at the time of the merger.

Following the merger, Merrill's shareholders, excluding Messrs. Castro and Atterbury, will cease to participate in Merrill's future earnings or growth or benefit from any increases, if any, in the value of Merrill stock.

Merrill's common stock will be delisted from the Nasdaq National Market and price quotations will no longer be available. Merrill common stock is currently registered under the Securities Exchange Act of 1934. Following the merger, registration of Merrill common stock under the Exchange Act will be terminated, and, assuming Merrill does not issue any registered indebtedness, Merrill will be relieved of the obligation to comply with the public reporting requirements of the Exchange Act. Accordingly, Merrill will no longer be required to file periodic reports with the SEC.

At the close of the merger, unexercised and unvested options to purchase common stock under our stock option plans will be converted into cash. See "Special Factors — Interests of Certain Persons in the Merger; Certain Company Benefit Plans; and Continued Ownership of Merrill."

Merrill's articles of incorporation and by-laws in effect immediately before the merger (including the amendment to add the class B common stock) will remain Merrill's articles of incorporation and by-laws immediately after the merger.

Merrill's executive officers immediately before the merger will remain as Merrill's executive officers immediately after the merger. Viking's directors immediately before the merger will become Merrill's directors after the merger. It is contemplated that immediately prior to the merger, Messrs. Castro and Atterbury will be appointed to the board of directors of Viking. After the merger, the number of the surviving company's directors will be increased to seven. The identity of the three additional directors has not been determined at this time.

Plans for Merrill After the Merger

Extraordinary Corporate Transactions. Merrill has not, and Merrill has been advised by Viking and DLJMB that they have not, approved any:

/*/  specific plans or proposals for any extraordinary corporate transaction involving Merrill, as the surviving company after the completion of the merger; or

/*/  sale or transfer of a material amount of assets currently held by Merrill after the completion of the merger.

Management. Merrill has been advised by Viking and DLJMB that they intend to retain Merrill's senior management in comparable positions after the merger. Viking has entered into employment agreements with John Castro and Rick Atterbury which will become effective upon the completion of the merger. See "— Interests of Certain Persons in the Merger; Certain Merrill Benefit Plan; and Continued Ownership of Merrill After the Merger." Viking's directors immediately before the merger will become Merrill's directors after the merger. It is contemplated that immediately prior to the merger, Messrs. Castro and Atterbury will be appointed to the board of directors of Viking. After the merger, the number of the surviving company's directors will be increased to seven. The identity of the three additional directors has not been determined at this time.

Share Ownership. Merrill has been advised by Viking, DLJMB and Messrs. Castro and Atterbury that after the merger they intend to hold their shares of capital stock of Merrill for long-term investment. In addition, following the merger, Merrill intends to make available to some of its employees equity plans and other incentives relating to its equity securities. At this time, there has been no final determination of the scope of the plans.

Capitalization. The capitalization of the surviving company following the merger is expected to consist of class B common stock and preferred stock. The class B common stock will have one vote per share and will be identical to the currently existing shares of Merrill common stock in all other respects, except that in the event of a liquidation of Merrill, holders of class B common stock would receive $1.00 per share. Shares of Merrill preferred stock will receive dividends of 14.00% per annum, compounded on a quarterly basis, will have a liquidation preference of $50.00 per share and will be redeemable for the first five years at a premium at the option of the surviving company and, thereafter, at reduced premiums under certain circumstances. The shares of preferred stock are required to be redeemed in November 2011 in the event they have not been redeemed or disposed of prior to that date.

Right to Change Plans. Although Viking and DLJMB deem it unlikely, they reserve the right to change their plans at any time. Accordingly, DLJMB may elect to sell, transfer or otherwise dispose of all or any portion of the shares of capital stock owned by it after the merger or may decide that the surviving company should sell, transfer or otherwise dispose of all or any portion of its assets in each case to one or more of its affiliates or to any other parties as warranted by future conditions. Although Viking and DLJMB deem it unlikely, they reserve the right to make whatever personnel changes to the present management of Merrill they deem necessary after completion of the merger.

Conduct of the Business of Merrill If the Merger Is Not Completed

If the merger is not completed, the board of directors expects to retain our current management team, although there can be no assurance it will be successful in doing so. There are no plans in such circumstances to operate our business in a manner substantially different from presently operated.

Material Federal Income Tax Considerations

The following discussion is a summary of material United States federal income tax consequences of the merger to our shareholders whose shares of common stock are held as capital assets and converted into the right to receive $22.00 cash in the merger. Because it is a summary, it does not include an analysis of all potential tax effects of the merger.

For example, this summary:

/*/  does not consider the effect of any applicable state, local or foreign tax laws;

/*/  does not address all aspects of federal income taxation that may affect particular shareholders in light of their particular circumstances;

/*/  is not intended for shareholders that may be subject to special federal income tax rules, such as:

/-/

insurance companies,



/-/

tax-exempt organizations,



/-/

financial institutions or broker-dealers,



/-/

shareholders who hold their common stock as part of a hedge, straddle or conversion transaction,



/-/

shareholders who acquired their common stock pursuant to the exercise of an employee stock option or otherwise as compensation, and



/-/

shareholders who are not citizens or residents of the United States or that are foreign corporations, foreign partnerships or foreign estates or trusts as to the United States;

/*/  does not address tax consequences to holders of stock options; and

/*/  does not address tax consequences to Viking, DLJMB, John Castro or Rick Atterbury, any of their affiliates or any person who would be treated as constructively owning Merrill common stock immediately after the merger by reason of the attribution rules of Section 318 of the Internal Revenue Code.

This summary assumes that shareholders have held their common stock as a "capital asset" under the Internal Revenue Code. Generally, a "capital asset" is property held for investment. This summary is based on the current provisions of the Internal Revenue Code, applicable Treasury Regulations, judicial authorities and administrative rulings and practice. It is possible that the Internal Revenue Service will take a contrary view. We have not sought and do not intend to seek a ruling from the Internal Revenue Service with respect to any aspect of the merger. Future legislative, judicial or administrative changes or interpretations could alter or modify the statements and conclusions set forth in this section. Any such changes or interpretations could be retroactive and could affect the tax consequences of the merger to you.

You should consult your own tax advisor with respect to the particular tax consequences of the merger, including the applicability and effect of any state, local or foreign tax laws, and of changes in applicable tax laws.

Treatment of Holders of Common Stock. The conversion of your shares of common stock into the right to receive $22.00 cash in the merger (or pursuant to the exercise of your dissenters' rights) will be fully taxable to you. You will recognize a capital gain or loss equal to the difference between (1) the amount of cash you receive in the merger and (2) your tax basis in the common stock. Generally, your tax basis in your common stock will be equal to what you paid for your stock.

If you are an individual, (1) capital gain will be taxable at a maximum capital gains rate of 20% if you held your shares for more than one year at the time of the merger, and (2) capital loss may only be offset against capital gains or up to $3,000 per year of ordinary income, with a carryover of capital loss to subsequent years to the extent unused.

Backup Withholding. You may be subject to backup withholding at the rate of 31% with respect to the gross proceeds you receive from the conversion of your common stock unless you:

/*/  are a corporation or other exempt recipient and, when required, establish this exemption; or

/*/  provide your correct taxpayer identification number, certify that you are not currently subject to backup withholding and otherwise comply with applicable requirements of the backup withholding rules.

If you do not provide us with your correct taxpayer identification number, you may be subject to penalties imposed by the Internal Revenue Service. Any amount withheld under these rules will be creditable against your federal income tax liability. We will report to you and to the Internal Revenue Service the amount of any reportable payment made to you (including payments made to you pursuant to the merger) and any amount withheld pursuant to the merger.

Accounting Treatment

We expect that the transactions contemplated by the merger agreement will be accounted for as a recapitalization consisting of an equity investment by investors, debt financing and the redemption of shares in the merger. As a recapitalization, the historical cost bases of our assets and liabilities will be carried forward to the surviving company with the aggregate cost of repurchasing our shares accounted for as a reduction of shareholders' equity. Accordingly, the historical bases of our assets and liabilities should not be affected by the merger.

Financing; Source of Funds

The amount of funds required to (1) fund the payment of the merger consideration and the surrender of outstanding stock options; (2) repay and/or fund our existing indebtedness and other obligations; and (3) pay the fees and expenses in connection with the merger is estimated to be $498.5 million.

Viking intends to obtain these funds from concurrent equity and debt financings, as follows:

/*/  approximately $107.2 million of Viking common and preferred stock will be purchased by DLJMB and its affiliates;

/*/  approximately $245.0 million will be provided to the surviving company under a $195.0 million senior secured term loan and a $50.0 million senior secured revolving credit facility to be arranged by DLJ Capital Funding, Inc.; and

/*/  approximately $190.0 million will be raised through a public offering or private placement of senior subordinated notes or, if unable to raise such funds, through senior subordinated increasing rate notes to be purchased by DLJ Bridge Finance, Inc.

At the time the merger becomes effective, Merrill is expected to borrow the full amount of the $195.0 million term loan and approximately $6.3 million of the revolving credit facility. The remainder of the revolving credit facility, which will be approximately $43.7 million, will be available to fund the working capital requirements of the surviving company after the merger.

On July 14, 1999, DLJ Merchant Banking II, Inc. received an executed commitment letter from DLJ Capital Funding, Inc. and DLJ Bridge Finance, Inc. where DLJ Capital Funding, Inc. agreed to provide the new credit facilities, and DLJ Bridge Finance, Inc. agreed, in the event Viking is unable to raise funds through a public offering or private placement, to purchase the entire amount of the senior subordinated increasing rate notes.

Also on July 14, 1999, Viking received an executed commitment letter from DLJMB under which it agreed to purchase Viking shares in an aggregate amount of $107.2 million. It is expected that DLJMB and certain affiliates will acquire common and preferred stock of Viking for such amount.

Each of these commitments is subject to customary conditions, including the negotiation, execution and delivery of definitive documentation with respect to such commitment. As of the date of this proxy statement, the terms of the new credit facilities and the senior subordinated notes have not yet been agreed upon.

Fees and Expenses

We estimate that merger-related fees and expenses, consisting primarily of commitment fees under certain debt arrangements, financial advisory fees, SEC filing fees, fees and expenses of investment bankers, attorneys and accountants and other related charges, will total approximately $23.9 million, assuming the merger is completed. This amount consists of the following estimated fees:

Regulatory Requirements

In connection with the merger, we will be required to make a number of filings with and obtain a number of approvals from various federal and state governmental agencies, including:

/*/  filing of articles of amendment and articles of merger with the Secretary of State of the State of Minnesota in accordance with the Minnesota Business Corporation Act after the approval of the merger proposal by Merrill shareholders;

/*/  complying with federal and state securities laws; and

/*/  notifying and furnishing certain information to the Federal Trade Commission and the Antitrust Division of the Department of Justice pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

Under the HSR Act, we must wait 30 calendar days from the date of filing our notification before we close the merger. During this waiting period, the FTC or the Antitrust Division may request additional information and extend the waiting period. In this event, the parties may not close the transaction until 20 days after they have substantially complied with the request for additional information. Both parties believe that consummation of the merger will not violate any antitrust laws. The FTC and the Antitrust Division have the authority to challenge the merger on antitrust grounds before or after the merger is completed. Each state in which Merrill or Viking has operations may also review the merger under state antitrust laws.

Shareholder Lawsuits Challenging the Merger

Plaintiffs have filed two lawsuits in Minnesota state court on behalf of Merrill shareholders. The lawsuits allege that the board of directors breached their fiduciary duties to Merrill's shareholders in approving the merger, and that Merrill's shareholders will not receive adequate compensation for their shares of Merrill common stock pursuant to the merger agreement. The plaintiffs seek to enjoin or rescind the merger, or to recover compensatory damages if the merger is closed and not rescinded. We believe these lawsuits are without merit and intend to defend them vigorously.

THE MERGER AGREEMENT

On July 14, 1999, Merrill entered into the merger agreement with Viking. The following is a summary of the material provisions of the merger agreement. Because it is a summary, it does not include all of the information that is included in the merger agreement. The text of the merger agreement, which is attached as Appendix A to this proxy statement, is incorporated into this section by reference. We encourage you to read the merger agreement carefully in its entirety.

The Merger

Upon effectiveness of the merger, Viking will be merged with Merrill, and Merrill will continue as the surviving company. In connection with the merger,

/*/  you will be entitled to receive $22.00 in cash for each of your shares of Merrill common stock outstanding at the time of the merger;

/*/  John Castro, Merrill's President and Chief Executive Officer, and Rick Atterbury, Merrill's Executive Vice President and Chief Technology Officer, both of whom are also members of Merrill's board of directors, will:

/-/

continue to hold the shares of the new class B common stock that they will receive shortly before the merger in exchange for some of their shares of Merrill common stock;



/-/

sell to DLJMB before the merger, for $22.00 in cash, each of their remaining shares of Merrill common stock;



/-/

receive following the merger, a cash payment for cancellation of their outstanding options; and



/-/

remain directors and executive officers of Merrill;

/*/  the holders of each share of Viking's common stock will be entitled to receive class B common stock in the surviving company for each of their shares of Viking's common stock outstanding at the time of the merger; and

/*/  the holders of each share of Viking's preferred stock and warrants will be entitled to receive preferred stock or warrants, as the case may be, in the surviving company for each of their shares of Viking's preferred stock or warrants outstanding at the time of the merger.

As the surviving company after the merger, Merrill will have all the property, rights and powers of both Viking and Merrill before the merger, and it will be liable for all of the debts, liabilities and obligations of both Viking and Merrill before the merger. After the merger, the separate corporate existence of Viking will cease.

Time of Closing

The merger will close as soon as possible after satisfaction or waiver of the conditions to the merger. To complete the merger, Viking and Merrill will make certain filings with the Secretary of State of the State of Minnesota.

Authorization of Class B Common Stock; Exchange

Amendment to Merrill's Articles of Incorporation. John Castro and Rick Atterbury will retain an ownership interest in Merrill after the merger by exchanging some of their shares of Merrill common stock for shares of newly created class B common stock of Merrill.

To establish the class B common stock, we need to amend Merrill's articles of incorporation to provide for this class of stock. By voting to approve the merger agreement, you will also be approving an amendment to Merrill's articles of incorporation to authorize the issuance of 10 million shares of this new class B common stock, par value $.01 per share.

The holders of class B common stock would have the same rights and preferences as Merrill's existing common stock have except that in the event of a liquidation of Merrill, the holders of the class B common stock would receive a liquidation preference of $1.00 per share. A copy of the proposed amendment to our articles of incorporation is attached to this proxy statement as Appendix B.

Exchange. John Castro intends to exchange 909,091 shares of Merrill common stock, representing approximately 47.65% of the Merrill shares that he currently owns. Rick Atterbury intends to exchange 70,000 shares of Merrill common stock, representing approximately 25.24% of the Merrill shares that he currently owns. They will each receive one share of class B common stock for each Merrill share exchanged.

The closing of the merger is conditioned on our shareholders amending Merrill's articles of incorporation to provide for the class B common stock and Messrs. Castro and Atterbury exchanging 909,091 and 70,000 shares of common stock, respectively, for the newly established class B common stock. Under the terms of the voting agreement, Messrs. Castro and Atterbury are obligated to make such exchange immediately before the closing of the merger.

Exchange and Payment Procedures

We have appointed Norwest Bank Minnesota, N.A. as our exchange agent to handle the exchange of our share certificates in the merger for cash. Soon after the merger becomes effective, the exchange agent will mail to you a letter of transmittal and instructions explaining how to exchange your share certificates for cash. Upon surrender to the exchange agent of a valid share certificate and a properly completed letter of transmittal, along with such other documents as the exchange agent may reasonably require, you will be entitled to receive $22.00 in cash per share. Until surrendered in this manner, each share certificate will represent only the right to receive the merger consideration.

You should not send your stock certificates now. You should send them only after you receive a letter of transmittal from the exchange agent. A letter of transmittal will be mailed to you soon after the merger becomes effective.

Any merger consideration made available to the exchange agent that remains unclaimed by our shareholders for six months after the time the merger becomes effective will be returned to us, as the surviving company after the merger, and any of our shareholders who have not by that time made an exchange must then look to the surviving company for payment of their claim for merger consideration. Amounts unclaimed after two years will be kept by us, subject to state unclaimed property laws.

Transfers of Shares

No transfers of shares of Merrill common stock will be made on our share transfer books after the merger becomes effective.

Treatment of Stock Options

At the time the merger becomes effective, all outstanding options to purchase shares of Merrill common stock will be canceled. In exchange, optionholders will receive, whether or not their options have vested, an amount determined by multiplying (1) the excess, if any, of $22.00 over the exercise price per share of the option by (2) the number of shares subject to the option. To the extent the acceleration of the vesting of the options or the payment of cash in exchange for all or part of the options, together with any other payment the optionholders have the right to receive from us would constitute an "excess parachute payment" under Section 280G of the Internal Revenue Code, then the payments will be reduced so they will not be subject to any excise tax imposed by Section 4999 of the Internal Revenue Code. The payments will not be reduced, however, if the optionholder is subject to a separate agreement with us that provides otherwise.

Representations and Warranties

In the merger agreement, Merrill has represented and warranted certain matters to Viking. These include representations and warranties relating to:

/*/  its organization, standing and similar corporate matters;

/*/  its authorization to enter into the merger agreement;

/*/  regulatory consents;

/*/  non-contravention of its agreements;

/*/  its capital structure;

/*/  the accuracy of its SEC filings;

/*/  the accuracy of information supplied by Merrill in connection with this proxy statement;

/*/  the absence of certain changes or events since the date of its most recent quarterly financial statements filed with the SEC;

/*/  the absence of material undisclosed liabilities;

/*/  the absence of pending or threatened material litigation;

/*/  filing of tax returns and payment of taxes;

/*/  existence of benefit plans and employment matters;

/*/  compliance with applicable laws;

/*/  possession of required material permits;

/*/  existence of ownership of or rights to use its intellectual property;

/*/  environmental liabilities and compliance with environmental laws;

/*/  finders' fees and expenses; and

/*/  the inapplicability of certain restrictions of Minnesota law.

The merger agreement also contains representations and warranties of Viking relating to, among other things:

/*/  its organization, standing and similar corporate matters;

/*/  its authorization to enter into the merger agreement;

/*/  non-contravention of Viking's agreements;

/*/  the accuracy of information supplied by Viking in connection with this proxy statement;

/*/  brokers' fees and expenses; and

/*/  financing commitments in connection with the merger.

The representations and warranties in the merger agreement do not survive the closing of the merger or termination of the merger agreement.

Merrill's Covenants

We have undertaken certain covenants in the merger agreement. The following summarizes the more significant of these covenants:

Interim Conduct of Our Business. From July 14, 1999 until the merger becomes effective, we have agreed to conduct our businesses in the ordinary course and consistent with past practice. We have also agreed to use commercially reasonable efforts to preserve our business and relationships with third parties and employees.

We have also agreed to certain specific restrictions during this period which are subject to the exceptions described in the merger agreement. These include restrictions on:

/*/  amending our organizational documents;

/*/  making significant acquisitions, disposals and investments;

/*/  incurring significant debt;

/*/  making significant loans;

/*/  making significant capital expenditures;

/*/  splitting, combining or reclassifying our stock or declaring dividends;

/*/  adopting new employee compensation arrangements or materially increasing employee compensation or benefits;

/*/  revaluing our assets;

/*/  paying unusual claims;

/*/  changing our tax elections or settling any material income tax liability; and

/*/  changing our accounting policies or procedures, unless required by the SEC or GAAP.

We have also agreed not to commit to do any of these things.

No Solicitation. We have agreed that we and our subsidiaries and our officers, directors, employees and advisors will not take action to solicit, initiate, encourage or knowingly facilitate the making of any acquisition proposal. An acquisition proposal means any offer or proposal for, or any indication of interest in, any acquisition or purchase of any significant business or assets of ours, acquisition or purchase of a significant amount of our stock, or any significant tender offer, exchange offer, merger, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving us.

Restricted actions include engaging in discussions or negotiations with any potential bidder, or disclosing non-public information relating to us or our subsidiaries or affording access to our properties, books or records to a potential bidder. These actions are permitted in response to an unsolicited bona fide offer so long as before doing so:

/*/  the special committee of the board of directors determines by a majority vote in its good faith judgment that it is necessary to do so to comply with its fiduciary duty to shareholders, after receiving the advice of outside legal counsel; and

/*/  we receive from the potential bidder an executed confidentiality agreement with terms no less favorable to us than those contained in the existing confidentiality agreement between us and DLJ Merchant Banking II, Inc.

We must keep Viking informed of the identity of any bidder or potential bidder and the terms and status of any offer. However, if the special committee of the board of directors reaches the fiduciary duty determination described in the previous paragraph that it is necessary to do so, we can withhold this information.

Covenants Relating to the Special Meeting and Proxy Materials. We have agreed to call a special meeting to vote on the merger agreement and articles amendment. We have also agreed that our directors, including at least a majority of our disinterested directors, will recommend approval and adoption of the merger agreement and the merger by our shareholders and that they will not withdraw their recommendation. This obligation is subject to the fiduciary duties of our directors, as advised by counsel.

We have also agreed to prepare and mail this proxy statement quickly, to use commercially reasonable efforts to obtain shareholder approval for the merger and related matters and to comply with all legal requirements at the special meeting.

Certain Other Covenants. We have agreed that before the merger becomes effective we will provide evidence to Viking that, except as requested by Viking, our current directors will resign when the merger becomes effective.

Viking's Covenants

Viking has also undertaken certain covenants in the merger agreement. The following summarizes the more significant of these covenants.

SEC Filings. Viking agreed to file a transaction statement with the SEC relating to the merger as required by the SEC's Rule 13e-3 under the Securities Exchange Act of 1934. The information included in this proxy statement is intended to comply with Rule 13e-3.

Certain Employee Matters. Viking also agreed that for at least one year from the time of the merger, it will cause us, as the surviving company of the merger, and our subsidiaries to provide benefits to our employees comparable to those currently provided by us and our subsidiaries. This does not apply to any stock option or other equity based incentive plan currently provided by Merrill.

Indemnification and Insurance of Merrill's Directors and Officers. Viking also agreed to cause Merrill, as the surviving company after the merger, to indemnify its present and former officers and directors against matters occurring before the merger became effective. This obligation lasts for a period of six years. Viking has also agreed that for six years after the closing date of the merger, it will cause Merrill, as the surviving company, to provide officers' and directors' liability insurance for each person currently covered by our officers' and directors' liability insurance policy on terms no less favorable than our current policy. However, Merrill will not be obligated to pay premiums in excess of 200% of the amount it paid in its last full fiscal year.

Additional Agreements

Both parties to the merger agreement have agreed to use commercially reasonable efforts to do or cause to be done anything necessary or advisable to consummate the merger and related transactions. We have also agreed to cooperate with each other in relation to certain matters, including making the necessary SEC filings, obtaining regulatory and other consents and making public announcements.

Conditions

Mutual Closing Conditions. Both parties' obligations to consummate the merger are subject to the satisfaction or, if legally permissible, waiver at or before the time the merger becomes effective of the following conditions:

/*/  the approval by Merrill shareholders of the merger proposal;

/*/  the expiration of the HSR Act waiting period; and

/*/  the absence of any legal prohibition preventing completion of the merger.

Additional Closing Conditions for Viking's Benefit. Viking's obligation to complete the merger is subject to the following additional conditions:

/*/  the material performance by Merrill of its obligations under the merger agreement;

/*/  Merrill's representations and warranties being accurate as of the closing date of the merger to the extent specified in the merger agreement;

/*/  there being no proceeding by any governmental body, among other things, challenging, delaying or prohibiting the merger or requiring Merrill, as the surviving company after the merger, to dispose of a material portion of its assets;

/*/  the receipt by Viking of documents relating to Merrill's standing and authority to enter into the merger agreement;

/*/  the availability to Viking of sufficient funds to complete the merger;

/*/  the holders of no more than 10% of outstanding Merrill common stock exercising their dissenters' rights;

/*/  there being no change in accounting practice or policies by the SEC that would cause Viking to conclude that the merger will not be treated as a "recapitalization" for financial reporting purposes;

/*/  the articles amendment having become effective and the completion of the exchange of John Castro's and Rick Atterbury's shares into class B common stock;

/*/  if required by Viking, the filing of a certificate of designation with the Minnesota Secretary of State to create preferred stock that will be issued in connection with the merger;

/*/  Merrill's total net indebtedness not being more than $125.0 million at closing.

Additional Closing Conditions for Merrill's Benefit. Merrill's obligation to complete the merger is subject to the following additional conditions:

/*/  Viking's material performance of its obligations under the merger agreement;

/*/  Viking's representations and warranties being accurate as of the closing date of the merger to the extent specified in the merger agreement; and

/*/  the board of directors receiving advice that when the merger becomes effective Merrill, as the surviving company,

/-/

will not become insolvent,



/-/

will not be left with unreasonably small capital,



/-/

will not have incurred debts beyond its ability to pay such debts as they mature and



/-/

its capital will not become impaired.

Termination of the Merger Agreement

Right to Terminate. The merger agreement may be terminated at any time before the closing in any of the following ways:

(a)

by mutual written consent of Merrill and Viking;

(b)

by either Merrill or Viking if the merger is not completed by December 31, 1999. However, the party seeking to terminate for this reason must not be in breach of its obligations under the merger agreement in any material respect;

(c)

by either Merrill or Viking if the other breaches in any material respect any of its obligations under the merger agreement or if the representations and warranties given by the other are materially incorrect when made or at any time up to closing;

(d)

by either Merrill or Viking if completion of the merger is illegal or prohibited;

(e)

by Viking if the board of directors withdraws, modifies or amends in a manner adverse to Viking their approval or recommendation of the merger or certain related matters, or if it recommends or endorse an alternative transaction, or if Merrill fails to mail the proxy statement in a timely fashion or fails to include the recommendation of its board of directors in such proxy statement;

(f)

by Merrill if the board of directors authorizes it to enter into another transaction that is superior to the merger in the manner set out in the merger agreement and Merrill pays Viking the $12 million termination fee described below. However, Merrill can only terminate the merger agreement in these circumstances if it has notified Viking of the material terms of the alternative transaction and Viking has not within three days made an offer determined by the special committee of the board of directors to be at least as favorable to shareholders as the alternative proposal; and

(g)

by either Merrill or Viking if Merrill's shareholders do not approve the merger agreement and articles amendment.

If the merger agreement terminates, it will become void. However, termination will not affect the rights of either party against the other for breach of the merger agreement. Also, certain obligations survive termination of the agreement, including the obligation to pay the fees described under "Termination Fees" below and certain confidentiality obligations.

Termination Fees

Merrill has agreed to pay Viking $12 million in cash if the merger agreement is terminated by Merrill or Viking for the reasons described in (e) or (f) above.

Merrill must also pay Viking $12 million in cash if all of the following events occur:

/*/  Merrill receives an offer to enter into an alternative transaction with a third party before the date of the special meeting;

/*/  the merger agreement is terminated because Merrill's shareholders do not approve the merger or the merger is not completed by December 31, 1999; and

/*/  within 12 months of the termination of the merger agreement, Merrill enters into a transaction (whether or not with that third party) that is superior to the merger.

Expenses

Except as described above, all costs and expenses incurred in connection with the merger agreement will be paid by the party incurring those costs or expenses.

Amendments; Waivers

Any provision of the merger agreement may be amended or waived before the merger becomes effective. After approval of the merger agreement by Merrill shareholders, no amendment or waiver can be made that alters the consideration to be received for Merrill common stock or that would adversely affect the rights of Merrill shareholders, without their further approval.

THE VOTING AGREEMENT

On July 14, 1999, Viking entered into a voting agreement with Merrill, John Castro and Rick Atterbury. The following is a summary of the material provisions of the voting agreement. Because it is a summary, it does not include all of the information that is included in the voting agreement. The text of the voting agreement, which is attached as Appendix C to this proxy statement, is incorporated into this section by reference. You should read the voting agreement carefully in its entirety.

Scope of Agreement

The voting agreement relates to 1,907,716 shares of Merrill common stock owned by John Castro and 277,362 shares owned by Rick Atterbury. Certain parts of the voting agreement also relate to John Castro's 76,300 options and Rick Atterbury's 205,000 options to acquire shares of Merrill common stock.

Restrictions on Transfer

During the period covered by the voting agreement, Messrs. Castro and Atterbury have agreed that they will not dispose of their Merrill shares or options. They are, however, permitted to transfer up to 10% of their shares to a charitable organization during the five days before the special meeting.

Voting; Proxy

Messrs. Castro and Atterbury have agreed to vote their Merrill shares to approve the merger proposal. This obligation relates to any shareholder meetings or adjournments when the merger proposal is voted on. They have also agreed that for the period covered by the voting agreement they will not vote their Merrill shares in favor of any other merger, consolidation, sale of assets, reorganization, recapitalization, liquidation or winding up, or any other extraordinary transaction. They have also agreed not to vote their Merrill shares in favor of any action that would either frustrate the purpose of or prevent or delay completion of the transactions contemplated by the merger agreement. They have irrevocably agreed to appoint Viking as their proxy to vote their Merrill shares in this manner.

No Solicitation; No Exercise of Dissenters' Rights

Messrs. Castro and Atterbury have agreed that, subject to their fiduciary duties, they will not during the period covered by the agreement:

/*/  take any action to solicit, initiate or encourage an alternative acquisition transaction;

/*/  engage in negotiations with or disclose any non-public information relating to Merrill or any of our subsidiaries;

/*/  provide access to the properties, books or records of Merrill or any of our subsidiaries; or

/*/  otherwise assist, facilitate or encourage any potential bidder.

In addition, they have agreed not to exercise any rights to dissent with respect to their Merrill shares and the merger.

Exchange of Shares

Messrs. Castro and Atterbury have agreed to exchange an aggregate of 979,091 of their shares of Merrill common stock into new class B shares. This exchange is described under the caption "The Merger Agreement — Authorization of Class B Common Stock; Exchange" contained elsewhere in this proxy statement. Merrill has agreed to take all reasonable actions necessary to ensure that this exchange is completed.

Termination

The voting agreement will terminate at the time the merger becomes effective or when the merger agreement is terminated, whichever happens earlier.

RIGHTS OF DISSENTING SHAREHOLDERS

Right to Dissent

Under the Minnesota Business Corporation Act, holders of Merrill common stock are entitled to dissent from the proposed merger and articles amendment and obtain "fair value" plus interest for their shares by asserting their dissenters' rights.

For purposes of dissenters' rights, "fair value" means the value of the shares immediately before the effective time of the merger, and "interest" means interest commencing five days after the effective time of the merger up to and including the date of payment at the rate provided by Minnesota law for interest on verdicts and judgments.

The following is a summary of your dissenters' rights under the Minnesota Business Corporation Act. Because it is a summary, it does not include all of the information that you will need to exercise properly your dissenters' rights. You should read the dissenters' rights provisions in Sections 302A.471 and 302A.473, the full texts of which are attached to this proxy statement as Appendix E, carefully and in their entirety because they, and not this summary description, define your rights to dissent.

If you choose either to assert your dissenters' rights or preserve your right to dissent, you should carefully review the requirements under Sections 302A.471 and 302A.473 and consult with an attorney.

If your shares are held of record in the name of another person, such as a bank, broker or other nominee, you must act promptly to cause the record holder to follow the steps summarized below properly and in a timely manner in order to perfect whatever dissenters' rights you may have.

A Dissenting Shareholder Must Perfect Dissenters' Rights

If you elect to exercise your dissenters' rights, to "perfect" them, you must:

/*/  provide us with written notice of your intention to demand payment of the fair value of your shares before             , 1999, the date of the special meeting;

/*/  not vote your shares in favor of the merger; and

/*/  assert your dissenters' rights as to all of your shares (except where certain shares are beneficially owned by another person but registered under your name).

The written notice must reasonably inform us of your identity and your intention to exercise your dissenters' rights. All written notices should be:

/*/  addressed to:

Merrill Corporation
One Merrill Circle
St. Paul, Minnesota 55108
Attn: Secretary

/*/  filed before             , 1999, the date of the special meeting; and

/*/  executed by, or sent with the written consent of, the holder of record.

A failure to vote will not constitute a waiver of your dissenters' rights, but a vote in favor of the merger by proxy or in person will constitute a waiver of your dissenters' rights and will override any previously filed written notice of intent to demand payment. A signed proxy returned with no indication of how it should be voted (or an abstention) will be a vote for the merger and will therefore constitute a waiver.

If you fail to comply with these conditions, you will have no dissenters' rights with respect to your shares.

We Must Provide Dissenting Shareholders with Written Notice

If you have properly asserted your dissenters' rights, we must give you a written notice that must contain the following:

/*/  the address where your demand for payment and stock certificates must be sent;

/*/  the date when your demand and stock certificates must be received;

/*/  any restrictions on transfer of uncertificated shares that will apply after the demand for payment is received;

/*/  a form to be used to: (1) certify the date on which you, or the beneficial owner on whose behalf you dissent, acquired the shares or an interest in them and (2) demand payment; and

/*/  a copy of Section 302A.471 and 302A.473 and a brief description of the procedures to be followed under these sections.

Dissenting Shareholders Must Demand Payment and Return Shares

Within 30 days after the written notice described above is given, you must demand payment and deposit your stock certificate with the surviving corporation (or comply with any restrictions on uncertificated shares), or you will irrevocably forfeit your dissenters' rights. You will retain all rights as a shareholder until the effective time of the merger.

We Must Send Dissenting Shareholders Fair Value and Other Information

If you make a demand for payment and deposit your stock certificates, then we will send you an amount which we estimate to be the fair value of your shares, plus interest. The payment for fair value must be accompanied by the following:

/*/  our closing balance sheet and statement of income for a fiscal year ending not more than 16 months before the effective time of the merger;

/*/  our latest available interim financial statements;

/*/  an estimate of the fair value of your shares, plus interest;

/*/  a brief description of the method used to arrive at the estimate of the fair value;

/*/  a brief description of the procedures to be followed if you wish to demand supplemental payment; and

/*/  copies of Sections 302A.471 and 302A.473.

If, however, the merger is not completed or we dispute your right to dissent, we will not send you the fair value of your shares or the additional information listed above.

A Dissenting Shareholder May Demand Supplemental Payment

If you believe the amount of the payment is less than the fair value of your shares, plus interest, you must give written notice to us of your own estimate of the fair value of your shares, plus interest, within 30 days after the date we send you our fair value estimate and payment. Your written notice must also demand payment for the difference.

If you fail to give written notice of your estimate to us and demand payment for the difference within the 30-day time period, you will be entitled only to the amount we estimated as fair value and previously paid to you.

A Court Will Settle Fair Value Disputes

If we cannot agree within 60 days after we receive your estimate of the fair value of your shares, then we will file an action in a court of competent jurisdiction in Ramsey County, Minnesota, asking the court to determine the fair value of your shares, plus interest. If your demand is not settled within the applicable 60-day settlement period, you will be made a party to this proceeding.

After notice to you, the court will determine the fair value of your shares. The court may appoint one or more persons as appraisers to receive evidence and make recommendations to the court. You will be entitled to discovery on the same basis as any other party to a civil action. The court will determine the fair value of your shares by taking into account any and all factors the court finds relevant. The court will compute the fair value by utilizing any method or methods it deems appropriate.

The fair value of your shares, as determined by the court, will be binding on you. If the court determines that the fair value of your shares is in excess of our estimate of the fair value of the shares, then the court will enter a judgment in your favor in an amount by which the value determined by the court exceeds our estimate of the fair value, plus interest.

We May Withhold the Payment of Fair Value Under Certain Circumstances

If you were not a shareholder or are not dissenting on behalf of a person who was a beneficial owner of Merrill on July 14, 1999, we may withhold the payment of the estimated fair value, plus interest, for your or such person's shares. In order to withhold your payment, we must provide you with the following:

/*/  the notice and all other materials that were sent after shareholder approval of the merger to all shareholders who have properly exercised dissenters' rights;

/*/  a statement of our reason for withholding the payment; and

/*/  an offer to pay you an amount in full.

If you decline this offer, you may demand payment by following the same procedures described for demand of supplemental payment by shareholders who owned their shares as of July 14, 1999.

If you did not own shares on July 14, 1999 and fail to properly demand payment, you will be entitled only to the amount offered by us.

The rules and procedures for supplemental payment applicable to a dissenting shareholder who owned shares on July 14, 1999 will also apply to any shareholder properly giving a demand but who did not own shares of record or beneficially on July 14, 1999. However, any such shareholder is not entitled to receive any payment from us until the fair value of the shares, plus interest, has been determined pursuant to the rules and procedures for supplemental payment.

If you are considering exercising your dissenters' rights, you should bear in mind that the fair value of your shares determined under Sections 302A.471 and 302A.473 of the Minnesota Business Corporation Act could be more than, the same as or, in certain circumstances, less than the consideration you would receive pursuant to the merger agreement if you do not seek appraisal of your shares. Furthermore, the opinion of any investment banking firm as to fairness, from a financial point of view, is not an opinion as to fair value under Sections 302A.471 and 302A.473.

Cash received pursuant to the exercise of your dissenters' rights will be subject to income tax. See "Special Factors — Material Federal Income Tax Considerations."

If you fail to comply fully with the statutory procedure summarized above, you will forfeit your right to dissent and will receive the merger consideration for your shares.

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

    The tables below set forth selected consolidated financial information for us for each of the five fiscal years ended January 31, 1999 and the three month periods ended April 30, 1999 and 1998. We derived the consolidated statements of operations data and consolidated balance sheet data as of and for the five years ended January 31, 1999 from our consolidated financial statements which have been audited by PricewaterhouseCoopers LLP, independent accountants. We derived the consolidated statements of operations data and consolidated balance sheet data as of and for the three month periods ended April 30, 1999 and 1998 from our unaudited consolidated financial statements, which include all adjustments, consisting only of normal recurring adjustments, which management considers necessary for a fair presentation of results for these unaudited periods. The results of operations for the three months ended April 30, 1999 are not necessarily indicative of the results of operations that may be expected for the full fiscal year 2000.

    You should read the selected consolidated financial data presented below in conjunction with the "Management's Discussion and Analysis of Financial Condition and Results of Operations", our consolidated financial statements with related notes and other financial information contained or incorporated by reference in our Annual Report on Form 10-K for the year ended January 31, 1999, our Quarterly Report on Form 10-Q for the quarter ended April 30, 1999 and our Current Report on Form 8-K dated April 14, 1999, as amended on June 28, 1999 (which includes pro forma financial information reflecting the acquisition of Daniels Printing, Limited Partnership beginning on April 14, 1999), which we incorporate by reference in this proxy statement. See "Documents Incorporated By Reference."

No Pro Forma Financial Information

We have not provided any pro forma data giving effect to the proposed merger. We do not believe such information is material to you in evaluating the merger proposal since:

/*/  the proposed merger consideration is all cash;

/*/  if the proposed merger is completed, Merrill common stock would cease to be publicly traded; and

/*/  if the proposed merger is not completed, the recapitalization will not be effected.

No Financial Information for Viking

We have not provided any separate financial information for Viking since it is a special purpose entity formed in connection with the proposed merger and has no independent operations.

CERTAIN FINANCIAL PROJECTIONS

We do not as a matter of course make public forecasts as to future revenues, earnings or other financial information. We did, however, prepare certain projections which we provided to DJLMB and CIBC World Markets in connection with their analysis of the DLJMB proposal and their evaluation of Merrill's financial position at that time. The projections set forth below are included in this proxy statement solely because such information was provided to DLJMB. See "Special Factors — Background of the Merger" and "Special Factors — Opinion of the Financial Advisor for the Special Committee."

The projections set forth below were not prepared by us with a view to public disclosure or compliance with published guidelines of the SEC or the American Institute of Certified Public Accountants regarding prospective financial information. In addition, the projections were not prepared with the assistance of or reviewed, compiled or examined by, independent accountants. The projections reflect numerous assumptions, all made by our management, with respect to industry performance, general business, economic, market and financial conditions and other matters, all of which are difficult to predict and many of which are beyond our control. Accordingly, there can be no assurance that the assumptions made in preparing the projections set forth below will prove accurate, and actual results may be materially greater or less than those contained in the projections set forth below. See "Cautionary Statement Concerning Forward-Looking Information" on page 12 of this proxy statement.

The inclusion of the projections in this proxy statement should not be regarded as an indication that we or Viking or any of our or Viking's respective representatives, or respective officers and directors, consider such information to be an accurate prediction of future events or necessarily achievable. In light of the uncertainties inherent in forward looking information of any kind, we caution against undue reliance on such information. We do not intend to update, revise or correct such projections if they become inaccurate (even in the short term).

The following table summarizes the projections that were provided:

    In preparing the above financial projections, we have made certain assumptions about our markets, growth rates and other factors that may affect the accuracy of these financial projections. Specifically, we have assumed that our revenue will grow at an average rate of 12.0%, compounded annually from fiscal year 2000. In addition, we have assumed that our operating income will grow as a result of our (1) projected revenue growth; and (2) anticipated increased efficiencies in overhead utilization. We have also assumed that our projected growth in operating income will be partially offset by decreasing gross margins, resulting from product mix changes as we continue to focus on diversifying our various product lines. Revenue and operating income also reflect the acquisition of Daniels Printing, Limited Partnership beginning on April 14, 1999.

    The projections set forth above should be read together with the "Selected Historical Consolidated Financial Data" included in this proxy statement and our historical financial statements and other financial information and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" as set forth in Merrill's Annual Report on Form 10-K and Merrill's Quarterly Report on Form 10-Q for the quarter ended April 30, 1999, and the pro forma financial information reflecting the acquisition of Daniels Printing, Limited Partnership beginning on April 14, 1999 in our Current Report on Form 8-K dated April 14, 1999, as amended on June 28, 1999, each of which is incorporated by reference into this proxy statement.

COMMON STOCK MARKET PRICE AND
DIVIDEND INFORMATION

    Our common stock is traded on the Nasdaq National Market under the symbol "MRLL". The table below sets forth the high and low sales prices per share for each quarterly period for the two most recent fiscal years and for the current fiscal year to date as reported by Nasdaq. These prices do not include adjustments for retail markups, markdowns or commissions. These prices reflect a two-for-one stock split completed in October 1997.

    On July 14, 1999, the last trading day before the announcement of the merger agreement, the high, low and closing sales prices per share of our common stock as reported by Nasdaq were $17.75, $17.13 and $17.56, respectively. On             , 1999, the last trading day before the date of this proxy statement, the high, low and closing sales prices per share of our common stock as reported by Nasdaq were $    , $    and $    , respectively. You should obtain current market price quotations for Merrill common stock in connection with voting your shares.

    On the record date for the special meeting, there were approximately           holders of record of our common stock. We paid annualized cash dividends of $.08 per share in fiscal year 1999 and $.07 per share in fiscal year 1998. Total cash dividends approximated $1.3 million in fiscal year 1999 and $1.1 million in fiscal year 1998. Our revolving credit agreement limits our ability to pay dividends on our common stock. In addition, under the merger agreement, we have agreed not to pay any dividends on our common stock before the closing of the merger, except for our quarterly cash dividends, not in excess of $.02 per share.

COMMON STOCK PURCHASE INFORMATION

Purchases by Merrill

    During fiscal year 1999, we repurchased 734,000 shares of our common stock at an aggregate cost of $12.8 million, and during fiscal year 1998, we repurchased 264,000 shares at an aggregate cost of $3.1 million. The table below sets forth the purchases by us of our common stock since February 1, 1997, including: (1) the month and year we purchased these shares; (2) the number of shares we purchased; (3) the range of prices we paid for these shares and (4) the average purchase price per share for each quarterly period for the two most recent fiscal years and for the current fiscal year to date:

Purchases by Directors and Executive Officers of Merrill

    The table below sets forth the purchases by each of our directors and executive officers of our common stock since February 1, 1997 (or the date that the individual became an affiliate of Merrill, if this date is later) including: (1) the type of purchase; (2) the date the individual purchased shares; (3) the number of shares he or she purchased; (4) the price per share the individual paid for the shares and (5) the average purchase price for each quarterly period for the two most recent fiscal years and for the current fiscal year to date: