MONTREAL -- Transcontinental Inc. is buying Capri Packing as it moves into plastic packaging for cheese and fresh pasta to offset declines in traditional printing and soft advertising in its media division.

The Montreal printing company made the announcement of the US$133-million acquisition of U.S.-based Capri after reporting its net profit increased almost 10 per cent to $17.2 million in its first quarter.

CEO Francois Olivier said Wednesday the acquisition diversifies Transcontinental's holdings and will add to its revenues.

"Printing is not a growth business and media is a transformation business," Olivier said after the company's annual shareholder meeting.

"Packaging for food is evolving, but there's no such thing as a digital transformation and there's growth every year."

Transcontinental is Canada's largest printer and publishes magazines such as Canadian Living and Elle Canada, as well as books and flyers. It has a network of community newspapers and online portals in Quebec and the Atlantic provinces and is the owner of the Metro weekday daily in Montreal and co-owner of Metro Halifax. The company prints newspapers such as Montreal La Presse and the San Francisco Chronicle.

It is also the leading door-to-door distributor of advertising material in Canada, with Publisac in Quebec and Targeo in the rest of Canada.

Olivier said the company's printing expertise will help it succeed in the flexible, plastic packaging business by putting "ink on plastic instead of paper, and finishing the product."

"The only thing we have to learn in the next couple of months and years is the raw material. Paper is very different from plastic."

Capri Packaging is a division of Schreiber Foods Inc., a US$5 billion employee-owned dairy located in Green Bay, Wisconsin.

Under the deal, Transcontinental will acquire two plants in Clinton, Missouri, which employ about 200 people, and generates roughly US$72 million in annual revenues.

Schreiber Foods Inc. has signed a 10-year agreement with Transcontinental to secure Capri Packaging as a strategic supplier of its printed flexible packaging, which represents about 75 per cent of Capri's total revenues.

Also on Wednesday, Transcontinental (TSX:TCL.A) announced it will increase its quarterly dividend by 10 per cent, bringing it to 16 cents per share and raising the annual dividend to 64 cents per share from 58 cents.

The company's revenues fell to $499.3 million from $525.6 million in the past quarter, due primarily to the soft advertising market.

Net earnings applicable to participating shares grew almost 10 per cent to $17.2 million or 22 cents from $15.7 million or 20 cents, boosted by lower expenses but partially offset by higher income taxes compared to the first quarter of 2013.

Adjusted net earnings applicable to participating shares remained stable at $26.4 million, or 34 cents per share, as did adjusted operating earnings, at $43.5 million. The company attributed those results in part to changes to the company's cost structure and the positive impact of the loonie versus the U.S. dollar.

Shares in Transcontinental were down 23 cents to $14.82 in noon trading on the Toronto Stock Exchange.