2005 Market outlook year in review -- Cheers to 2004
by chris bauer
Merger and acquisition activity. Monster trade shows. New faces in high places. The luck of the draw. It all adds up to just another year in the commercial printing industry. Let's take a look back at how the year 2004 played out, and who made headlines during the past 12 months.
The year started out on shaky ground for the industry, with rumors that Heidelberg planned to sell off its web systems business and digital printing division, as well as reduce its worldwide work force by up to 1,000 employees.
Eventually, the whispers became a reality as the other players in these deals were revealed. Heidelberg's web systems business was purchased by Goss International and Eastman Kodak gobbled up Heidelberg's 50 percent stake in the digital division. Heidelberg announced it would concentrate on the sheetfed offset printing market and its related value chain.
This was not the only big move in the graphic arts market for Eastman Kodak. The company also signed an agreement to acquire the assets and business of Scitex Digital Printing for $250 million in cash.
In another mega-deal announced in the beginning of the year, FedEx acquired Kinko's in a $2.4 billion cash deal. Kinko's is now able to offer new or expanded FedEx shipping options at all 1,200 locations worldwide. Prior to the deal, only 134 stores had staffed FedEx counters.
Later in the year, FedEx purchased Quad/Graphics' Parcel Direct division for $120 million.
Not to be outdone, Kohlberg Kravis Roberts & Co. (KKR) and DLJ Merchant Banking Partners (DLJMBP), an affiliate of Credit Suisse First Boston's Alternative Capital Division, announced a series of transactions with an aggregate value of approximately $2.2 billion.
This created a unique specialty printing and marketing services enterprise under the leadership of former Quebecor World Chairman and CEO Marc Reisch.
Hitting the Trifecta
The transactions encompassed the recapitalization of Jostens and the acquisitions of Von Hoffmann Corp. and Arcade Marketing—three companies owned by DLJMBP.
Also on the M&A front, Tanagraphics and Seybert Nichols Printing Group merged to form what was said to be the largest privately owned company providing print management solutions in New York City. The new company is known as TanaSeybert.
Workflow Management, Palm Beach, FL, was acquired by WF Holdings, an entity controlled by Perseus LLC and The Renaissance Group, for $4.87 per share. Shortly after the merger was announced, President and CEO Gary Ampulski was fired and replaced by Chairman Gerald Mahoney.
Consolidated Graphics built up its market share in the Denver area by acquiring web and sheetfed printer Eastwood Printing. It also added Greenville, SC-based Electric City Printing and Dallas-based Newbridge Corp. to its arsenal.
Fellow consolidator Mail-Well made a transformation of a different kind by changing its name to Cenveo. Soon after, Cenveo acquired Seattle-based Valco Graphics and Waller Press of San Francisco.
There was plenty of people watching to do, as well, as some new—and old—names popped up in the industry. Pierre Karl Peladeau, who helped spearhead Quebecor's merger with World Color, was named president and CEO of Quebecor World. He replaced Jean Neveu, who held the dual roles on an interim basis.
Meanwhile, John Paloian, who spent 11 years with RR Donnelley before moving on to Quebecor World, returned to Donnelley as group president, publishing and retail services.
Stephanie Streeter, president and CEO of Banta Corp., assumed the role of chairman of the board of directors, replacing Donald Belcher who held the position for nine years before retiring.
Rémi Marcoux, the founder of GTC Transcontinental, entrusted the direction of his corporation to Luc Desjardins, who had been president and COO since 2000. Marcoux became executive chairman of the board and retained his controlling interest in the corporation.
New York City-based Bowne & Co. announced the retirement of Robert Johnson from the company and its board of directors for personal reasons. Johnson had been serving as chairman, president and CEO. The board appointed H. Marshall Schwarz, formerly chairman of the executive committee, to serve as non-executive chairman of the board. Philip Kucera, formerly senior vice president and general counsel, assumed the role of interim CEO, while David Shea was named president.
Heidelberg veteran Niels Winther stepped down as president of U.S. operations, and was replaced by James Dunn, former CFO of Heidelberg Web Systems. Also, Marcel Kiessling took the helm as president of Heidelberg Americas.
On a serious note, the long, strange saga surrounding the death of former Moore Corp. executive Ted Ammon took another turn with the indictment of Daniel Pelosi—an electrician who married Ammon's widow shortly after his death. The trial is ongoing as of presstime.
Drupa Year Causes Stir
A lot of attention was focused on trade shows, especially Drupa, held in May in Dusseldorf, Germany. It filled 17 halls, featured 1,860 exhibitors and drew more than 394,000 visitors. Although most North American printers opted to wait until October to see the newest equipment upgrades at Graph Expo & Converting Expo in Chicago, those who made the trek to Europe came with checkbooks in-hand.
Most notably, Quad/Graphics committed to $150 million worth of presses, including eight Heidelberg Sunday 3000/32 double-web presses and two MAN Roland Lithoman double-web presses. The company did not neglect its bindery at the show, signing on for nine Heidelberg finishing systems valued at $50 million.
The aforementioned Graph Expo show was also deemed a big success, with vendors reporting heavy traffic and strong leads and sales. Nearly 40,000 attendees traveled to Chicago for the show—an increase from 2003.
During Graph Expo, the 2004 class of the Printing Impressions/ RIT Printing Industry Hall of Fame was inducted. This year's honorees included Charles "Tuck" Krehbiel, CJK: Print Possibilities; Peter McLean, Continental Web Press; John Bell, The Ovid Bell Press; and George Stephenson, Stephenson Printing.
2004 was a good year for printers to play the lottery. Several lottery jackpots were claimed by printing company employees in the past 12 months. The good fortunes (no pun intended) began in January when 10 veteran employees at the Quebecor World facility in Montreal picked the winning numbers for the Super 7 Lotto, netting them a cool C$17.5 million. In May, Jim and Tom Hare, owners of Hare Brothers Printing in Philadelphia, hit paydirt in the multi-state Powerball game, taking a cash option of $26.9 million. Lightening struck again when 33 employees at Sussex Printing in Seaford, DE, collected the $117 million cash option from a $214.7 million Powerball jackpot.
Now that we have so much discretionary income, let's pop the cork on a nice bottle of Dom Perignon and toast to a healthy and lucrative 2005.