UPDATE 1-RR Donnelley drops bid for Quebecor World

* RR Donnelley says bid for Quebecor World expires

* Says "disappointed" the deal not accepted

* Says will pursue "other strategic initiatives" (In U.S. dollars unless noted)

TORONTO, June 10 (Reuters) - U.S. printing company R.R. Donnelley & Sons RRD.N abandoned its offer to buy insolvent Canadian rival Quebecor World (IQW.TO) on Wednesday, adding it is "disappointed" with the outcome.

In May, RR Donnelley had offered $1.35 billion in cash and stock for the company's assets, before sweetening the deal to about $1.5 billion earlier this month. However, RR Donnelley said Quebecor World had rejected the latest bid.

"This would have been an excellent fit for RR Donnelley and the best opportunity for the Quebecor World creditors," RR Donnelley Chief Executive Thomas Quinlan said in a statement.

"However, given our view of the Quebecor World operations, a transaction ascribing a higher value to Quebecor World than we offered in our last proposal is simply not in the interests of RR Donnelley."

Montreal-based Quebecor World, which is hoping to emerge from bankruptcy protection this summer, prints books, magazines, directories and advertising materials. It filed for court protection in January 2008 and currently has about 20,000 employees.

This week, it reiterated it is on pace to emerge from bankruptcy protection by next month.

Quinlan said RR Donnelley will now pursue "other strategic initiatives." (Reporting by Wojtek Dabrowski; editing by Peter Galloway)