Hamilton--Behind the Urge to Merge

You gotta love America. Only here could Bill Gates be watching almost idly as the Justice Department prepares to dismantle his empire just as changes in information technology were about to do it for him.

Ironically, while Microsoft is about to be broken up into two or three pieces, just about every other industry seems to be moving toward larger and larger conglomerates in search of so-called synergies. That the payoffs are few and far between doesn't seem to dampen anyone's enthusiasm—and certainly not that of the investment bankers and corporate lawyers that put these deals together.

Of course, this has been going on for some time in the graphic arts industry. Although it is the printers themselves that have been most active, suppliers are not standing by idly, either. It all started with the merger of Linotype and Hell Graphic Systems back in the mid-1990s, which was promoted with the tag-line "Strong Together." Then, after it became clear that this was not the case, the behemoth Heidelberger Druckmaschinen came to the rescue.

The next round came when DuPont decided that graphic arts film and chemistry weren't pulling in enough profits—even though the unit's annual turnover barely qualified as a rounding error in DuPont's net income. Thus Agfa vaulted to the number-one spot as the largest supplier of film and offset plates in the world. This was followed by Kodak spinning off its graphic arts division into a cooperative venture with Polychrome to create Kodak Polychrome Graphics.

More recently we've had some lesser, yet important, changes. First, Polaroid punted the graphic arts unit when executive management decided it couldn't add enough revenue to placate Wall Street. Across the big pond, Harlequin faced a financial crisis that required the business to be sold to the Global Graphics holding company last summer.