2006: Year That Was Stranger Than Fiction —Michelson
AS WE finish compiling the annual PRINTING IMPRESSIONS 400 ranking—now in its 23rd year—it’s a good time to reflect on major events that helped shape our industry during the past 12 months. A fiction writer would have been hard-pressed to develop a plot line with more drama, intrigue and folly than what played out in 2006 at some of the printing industry’s largest publicly held establishments.
Front and center, of course, was the unsolicited, and cantankerous, takeover attempt of Banta by hard-charging Cenveo Chairman and CEO Bob Burton. After several volleys back and forth between Burton and Banta Chairman, President and CEO Stephanie Streeter, Banta ultimately rejected a $50 per share offer by Cenveo and set its own cost-cutting wheels in motion by announcing the closure of five facilities and layoffs of more than 500 people. The $35 million initiative also included some “shark repellent” in the form of a special $16 per share cash dividend payable to Banta stockholders.
“Big Bad Wolf” Burton set a Halloween deadline for his takeover proposal, expecting “Little Red Riding Hood” Streeter to fold under the pressure and succumb to his takeover bid—just as the former board of directors at Cenveo had done—averting a special shareholders’ meeting and proxy vote that would surely ensue. But just when it appeared Burton might prevail, in swoops “White Knight” Mark Angelson, RR Donnelley chairman and CEO, to the rescue with a $1.3 billion or $52.50 per share offer ($36.50 per share after the special $16 dividend previously declared by Banta).
Streeter will not serve a role in the new Donnelley/Banta structure. But don’t assume there won’t be any big-ticket presents under her Christmas tree this holiday season. According to an article in the Milwaukee Journal Sentinel newspaper, Streeter will walk away with three times her annual pay plus a bonus, totalling more than $6.6 million. And, to make sure it doesn’t all go to Uncle Sam, an additional $4.5 million payout will cover her increased tax liability. Her stock options and restricted shares of Banta stock are reportedly worth an additional $7.2 million.
With the acquisition expected to close in late March 2007, Banta’s rank-and-file employees will surely not be so blessed as a result of the transaction. There won’t be fairy tale endings for many, as Banta is integrated into RR Donnelley’s existing assets. But, will there be even more fallout at Banta in terms of plant closures and layoffs than what would have transpired should Burton had prevailed?
Ironically, RR Donnelley itself appeared to be in play earlier in 2006 amid rumors that it was in discussion with various leveraged buyout (LBO) groups. Those talks reportedly broke down, however, when a valuation could not be agreed upon by the various parties.
Quebecor World also saw its share of ups and, mostly, downs. In April, former Sun Chemical executive Wes Lucas came on board as president and CEO just in time to announce a reorganization of the Montreal-based printer’s U.S. book and magazine platforms. Two facilities were shut down, resulting in more than 700 layoffs. One was a venerable book manufacturing plant in Kingsport, TN, which in its heyday as The Kingsport Press was a thriving operation where generations of people learned the craft.
Even the darling of industry rollups, Consolidated Graphics, seemed to lose steam, hiring an investment bank to explore options, including a sale of the company. But the M&A leader eventually decided otherwise, and closed out the year by acquiring one of the marquee names among the “high-end” printer set—The Hennegan Co. in Florence, KY.
What other ailing public company, if any, will appear in the crosshairs of Burton as he hunts for more big game in 2007 to replace “the one that got away?” With his tenacious tracking skills and killer instinct, Burton’s next prey most likely won’t escape his grasp.
Mark T. Michelson
