Target Report: Zig-Zagging

From Printing to Print Management to Business Process Outsourcing

Printing companies increasingly seek to diversify their service offerings via acquisitions of companies that support their customers’ communication needs outside of print. However, despite the increasing use of electronic media, print remains one of the critical channels in today’s messaging mix. Print-centric companies that proactively grow via an M&A strategy go back and forth, shifting directions, alternately completing transactions that bring in additional print volume, and then subsequently acquire a company with services that are adjacent to print, but not core to the mission of putting ink on paper.

RR Donnelley is Back in the Acquisition Game

In late December, RR Donnelley (RRD), now owned by Chatham Asset Management, announced its second big deal of 2024, the acquisition of Williams Lea. The deal is a classic example of “if you can’t beat ‘em, join ‘em,” or more correctly “buy ‘em.”

The acquired company, based in London, is one of a handful of firms that have successfully placed themselves firmly between printing companies and their large enterprise-level customers. As the intermediary between printer and customer, these firms purport to drive competition between print providers more effectively than can be achieved if the corporations leave print buying to their own internal staff.

The CEO of RRD noted that the acquisition of Williams Lea aligns the company’s strategy to build on their business support offerings to achieve their “vision of the Digital, Creative and Business Support Services segment.” The combination will enable their clients to “maximize their own customer engagement strategies and streamline their business operations.” No mention of acquired print volume.

For Williams Lea, the acquired company, the transaction is a full-circle return to its printing roots. German immigrant John Wertheimer came to London in 1820 with a letter of introduction to a member of the wealthy Rothschild family. Wertheimer used the resultant connections to start his printing business under the moniker Wertheimer & Co. Products produced were traditional printed items including books, stationery, and publications. With its German and Jewish roots, the company specialized in foreign language translation and printing, including Hebrew and German, a fact with subsequent impact on the company’s fortunes.

In 1864, the same year that Richard Robert Donnelley started his printing business in Chicago, John Edward Lea joined the London printing company, and the name was changed to Wertheimer Lea & Co. to reflect the new ownership. In 1884, a partnership was formed with John Henry Williams, a year after Wertheimer’s death. With the outbreak of the First World War, amid the anti-German sentiment in Britain, the Wertheimer name was dropped, and the firm’s name was changed to Williams Lea.

The company continued to grow, eventually housed in five separate manufacturing plants. In 1899, the company built its iconic six-story building in London on the corner of Clifton and Worship streets and consolidated its operations. At the time of construction, the building was considered state-of-the-art with electricity powering all the machines. That building still stands today, having survived the Blitz aerial bombing attack on London during the Second World War. As a specialist in foreign language printing, the company printed many of the propaganda leaflets dropped over Germany, as well as printed information that was distributed among the French underground resistance fighters.

As the London financial community blossomed during the last two decades of the twentieth century, the company launched an outsourcing business, initially focused on serving the City community (London’s Wall Street). That turned out to be a fortuitous decision and led to the transition of the company into its current form, primarily focused on serving financial, legal, and professional service firms.

In the year 2000, Williams Lea invented the disruptive print management model and landed a ground-breaking contract with AXA insurance, in which the company assumed all responsibility for the management of all AXA’s print production activities in the UK. According to their press release at the time, “this radical solution involved a substantial number of staff transfers” (from AXA’s payroll to Williams Lea’s). Reduction in the customer’s head count of non-core staff (e.g., print buyers, copy center operators) became a key selling point and led to other firms jumping on the print management bandwagon (e.g., Innerworkings, now part of HH Global). In this way, the Williams Lea strategy was more than just external cost reduction achieved through aggressive buying practices. As Williams Lea discovered, hiring a client’s print purchasing personnel enabled them to promise and deliver fully burdened cost reductions that most printers simply could not match.

Shortly thereafter, Williams Lea brought its outsourcing model to the US. As the owner of a commercial printing company at the time, I personally became aware of Williams Lea and its ability to insert itself into a formerly solid printer/customer relationship. A large regional eastern-US bank, which was then a significant customer of my printing company, told my business partner who managed the account that the bank would no longer be buying print directly. In what is now a familiar drill for many printing companies, we were introduced to a young analyst who worked for Williams Lea. We were told that to keep the bank’s print business, we needed to reduce our pricing by double-digits, commit to a punishing progressive rebate schedule, and submit to aggressive ongoing bidding and negotiations. Eventually, the demands were unsustainable, and we had to walk away from that formerly profitable customer. We had been intermediated.

With its print management and business process strategy fully developed, Williams Lea grew into a multi-national company with more than 8,000 employees across three continents. In 2006 the Williams family sold a controlling interest in the business to Deutsche Post, the German postal and logistics company. Deutsche Post envisioned synergies between its logistics and supply chain business and William Lea’s expertise in handling large volumes of sensitive documents.

Under Deutsche Post’s ownership, as mail volumes declined, a strategic plan was launched to move upstream in the value chain of document and marketing material production. To accomplish this, in 2011 Williams Lea acquired Tag Worldwide which provided creative, prepress and production services. Tag not only worked with advertising agencies, but it also competed with its clients in the creative sphere.

As it turned out, e-commerce volumes exploded, Deutsche Post reconsidered its strategy and decided that William Lea’s services fell outside its core operations. Consequently, in 2017 the business was sold to Advent International, the global private equity giant headquartered in Boston, Massachusetts. (For more see: The Target Report: Williams Lea Tag is on the Move – August 2017.)

Having been divested from Deutsche Post and now under Advent’s stewardship, Williams Lea completed its own divestiture and in 2023 sold Tag Worldwide to the Dentsu Group, the global advertising and public relations company based in Tokyo, Japan. This sale marked a strategic decision to separate the creative production arm, Tag, from Williams Lea’s core focus on document management and business process outsourcing services. Effectively, the sale of Tag was an about-face, a reversal of the upstream strategy, returning Williams Lea to its clear focus on the more pedestrian enterprise of business process outsourcing.

Back in the World of Print

This latest acquisition is in stark contrast to RRD’s purchase in March 2024 of the retail insert business (formerly Valassis) from Vericast. (For more see: The Target Report: Half a Loaf is Better than None – March 2024.) While the rhetoric surrounding RRD’s acquisition focused on the many forms of digital marketing included in the acquisition, the core of the acquired business was the newspaper advertising insert, coupon, and free-standing insert print business. The Zig to the Williams Lea Zag.

Click to enlarge.

Click to enlarge.

Click to enlarge.

View The Target Report online, complete with deal logs and source links for December 2024

For more information on Graphic Arts Advisors, visit graphicartsadvisors.com