Year for Broken Records

BY CHRISTOPHER CORNELL

If you spent any time at all in 1998 reading the quarterly reports issued by publicly traded printing companies, you are probably up to your Y2K-compatible eyeballs with the term "record-breaking." But as the year draws to an end, it's clear that the phrase will be remembered as the one that most describes it.

In previous years, consolidation was an interesting sidelight to other major events in the graphic arts industry. In 1998, it was all about consolidation. More than $3 billion was spent by larger fish swallowing up smaller ones, and while a few big names led the charge, they were no longer the only players in the game.

The leader was Greenwich, CT-based World Color Press, which itself spent half of that $3 billion to build its operation. It acquired Lexington, KY-based Magna Graphic, Metairie, LA-based Century Graphics and Atlanta-based specialty printer Dittler Brothers.

Robert G. Burton, chairman, president and CEO of World Color, and his team also purchased Wilmington, MA-based Acme Printing.

The companies purchased by Houston-based Consolidated Graphics (at a rate of about one every two weeks) were generally smaller. But by the end of the year, Consolidated was no longer just a notable startup. It was an industry powerhouse commanding more than $600 million in annual sales.

The other established player in the acquisition chase was Englewood, CO-based Mail-Well. Most notable among its moves was the creation of a new commercial printing division, which included companies such as Clarke Printing of San Antonio, TX; French Bray, Baltimore; and United Litho, Boston.

Also busy in the acquisitions game was New York-based Applied Graphics Technologies (AGT). It had a busy year, beginning with the acquisition of Pontiac, IL-based prepress house Flying Color Graphics, but made bigger news when it acquired the Devon Group.

New York-based Big Flower Holdings spent the year putting more distance between itself and the commercial printing industry, but did acquire Chicago's Enteron Group, a $60 million premedia company, and ColorStream Technologies, also in Chicago.

In addition to the established players, there were the newcomers to the game.

In Westport, CT, Terry Tevis, formerly an executive at R.R. Donnelley & Sons, was named to head Printing Arts America (PAA), a new industry consolidator being formed by merchant banking firm Kohlberg and Co.

To create the company, Kohlberg acquired four regional commercial printing companies: Classic Printing and American Corporate Literature, both in the Nashville area; S&S Graphics in the Washington/Baltimore area; and Printing Arts/LithoTech, near Chicago.

That was followed by the addition of Pompano Beach, FL-based AIM Riverside Press, Houston-based Jolley Printing and Bethlehem, PA-based Oaks Printing.

Another new player is former Moore and Quebecor Printing executive Graham McClean, who formed a partnership with the Thoma Cressey Equity Partners (TCEP) investment firm, creating yet another new industry roll-up company, Global Docugraphix. One of its first acquisitions was Little Rock, AR-based B-N-B Systems, followed by Santa Rosa, CA-based Associated Business Products and Dallas-based TPE Business Services.

A third new player was Memphis, TN-based Master Graphics, which completed an IPO and began making acquisitions, including Alexandria, VA-based Stephenson Printing and Indianapolis-based The Printing Co.

A fourth was in Philadelphia, where a company called Taconic Direct Holdings begin to make noise by acquiring the Brooklyn, NY-based OMNI Companies. It is promising more acquisitions to come.

R.R. Donnelley & Sons, North America's largest printer, has shown little interest in domestic acquisitions recently, but in 1998 Donnelley looked to international markets, acquiring Ediciones Eclipse, S.A. de C.V., Mexico's largest printer of retail inserts.

Donnelley also spent the year shedding some of its bulk. Its trouble-plagued Metromail was sold, after a heated bidding war, to Britain's Great Universal Stores (GUS). And New York-based Bowne & Co. purchased Donnelley's Enterprise Solutions.

North America's second largest printer, Quebecor Printing, also showed little interest in domestic acquisitions; its eyes were also abroad. It extended its sphere of influence globally with the acquisition of Asociación Editorial Stella, Peru's largest printer, then spent millions to acquire Tryckinvest i Norden AB (TINA), the largest printer in Sweden.

In the fall, Quebecor sold off its check and credit card businesses and its Barclay retail calendar business, while acquiring Bogata, Columbia-based book printer Imprandes Presencia S.A., one of the largest printers in South America.

Pewaukee, WI-based Quad/Graphics is another company that shunned the acquisition spotlight. Among its quieter moves this year, the company eliminated conventional imaging at all but one of its 13 imaging sites, inaugurated its new direct mail business, Parcel/Direct, and created a joint venture with the printing arm of Proszynski i S-ka, a printer/publisher based in Warsaw and Pila, Poland.

Moore Corp. spent much of the year hatching plans to revive its business forms business. "The company is not about earnings in 1998. It's about getting a [chief executive] in place, getting the strategy in place and achieving realignment efficiencies," noted a Moore official. That executive turned out to be Ed Tyler, who was appointed president and CEO in April.

Acquisitions also came from unexpected places. One such place was New York-based Unidigital, which first acquired New York's KWIK International Color, followed by Hy Zazula Associates.

In California, Los Angeles-based ColorGraphics acquired Irvine, CA-based Calsonic Miura Graphics.

One of the biggest shockers of the year came when New York-based Katz Digital Technologies agreed to be acquired by Photobition Group PLC, based in England.

For Dayton, OH-based Standard Register, it was a year when the company's sales would top $1 billion, but also a year when it made plans to close a number of printing centers and plants, including several former UARCO sites, which Standard Register acquired in 1997.

One other merger that was of interest to the industry: The Graphic Arts Technical Foundation and the Printing Industries of America approved a planned consolidation for the two trade associations, which will lead to the creation of Print and Graphics Associations International, the new umbrella organization.

What records will be set in 1999? Stay tuned!