Acquisitions Resume, Cautiously

ROSELLE, NJ—While it's nothing like the mad rush of M&A activity the industry saw two years ago, there has been a cautious spate of mergers and acquisitions in the graphic arts sector in recent weeks.

Perhaps the most unusual announcement came from Bellevue, WA, where business-to-business Internet company ImageX.com acquired Howard Press, a $30 million privately-held printing company based here, for $1.4 million in restricted stock and $12.6 million in cash, plus $5 million in debt refinancing. This is the fifth acquisition by ImageX in the last 15 months, and a rare example of a "dotcom" company buying a "bricks-and-mortar" operation.

Howard Press becomes a wholly owned subsidiary of ImageX.com and will continue to operate from its current headquarters. Howard Press President and CEO Scott Porter becomes COO of the new subsidiary, and 15 of Howard's salespeople will become part of the ImageX.com team.

Rich Begert, president and CEO of ImageX.com, says the Howard Press acquisition, like the previous acquisitions of Fine Arts Graphics and Image Press, was made to gain access to Howard's customer base, and that the decision was less about printing capabilities. "These customers chose Howard Press for the quality of their production, but now they'll have the added opportunity to move their vendor relationship online."

Englewood, CO-based Mail-Well also made a quiet acquisition recently, purchasing Trumble, CT-based Craftsmen Litho, in what officials say is one of the largest transactions in the Connecticut printing industry in recent years. Consulting firm Rampart Financial Group represented Craftsmen Litho in the deal.

Howard Drubner, former owner of Craftsmen Litho, says "Mail-Well offers the right foundation for the business going forward." Drubner will remain as president of Craftsmen Litho.

Craftsmen Litho, established in 1949, employs a staff of 90 at a facility featuring both web and sheetfed presses.

"I think this signifies that, despite the current slowdown in acquisition activity, large companies will still pay a premium price for very attractive companies like this," notes John Hyde, managing partner at Rampart.

Chicago-based Global DocuGraphix has acquired three companies from Broomfield, CO-based Corporate Express. Two of the acquisitions are document services companies Bank 'N Business Systems of Shreveport, LA, and Nashville, TN-based Inform.

Bank 'N Business Systems has additional offices in Texas, Arkansas, Missouri and Louisiana. Founded in 1967, the company was sold to Corporate Express in 1997. Founder John Meldrum will continue to serve as president of the company.

Inform was founded in 1988 by Gary Semanchik, who will continue to serve as president.

"The acquisition of these businesses solidifies our already strong presence in the mid-South," says Graham J. McClean, president and CEO of Global DocuGraphix.

Global also acquired Computer Software Inc. of Norcross, GA, which provides TopForm, an operating application for the business printing industry.

"When it became apparent that Corporate Express was divesting Computer Software, we felt compelled to act," explains McClean. "As TopForm is the operating application for Global DocuGraphix, we have a strong commitment to this product."

Neenah, WI-based Outlook Label Systems, a subsidiary of Outlook Group, has acquired substantially all of the operating assets of Star Labels, based in Troy, OH, from DocuSystems Inc. Officials say the acquisition will enable Outlook to provide shorter runs and quicker turnaround services to existing clients, while expanding the services being offered to the current client base of Star. Star specializes in tags and pressure-sensitive labels.

There were also two notable mergers of regional graphic arts companies: Two central Pennsylvania graphics service bureaus—Lancaster, PA-based Lancaster Ultra-Graphics and Mountville, PA-based Alphabet Graphics Prepress Services—have joined forces. The purchase of Alphabet Graphics Prepress will double the size of Ultra-Graphics.

To accommodate the expansion, Lancaster Ultra-Graphics is building a new 12,000-square-foot facility in Lancaster County.

Meanwhile, Austin, TX-based Ginny's Printing and Copying, a 125-employee quick printer and copy company, has acquired Merit Printing, a four-color commercial printer also in Austin. Combined annual revenues are projected to be $19 million.