Merger? Alliance? Agreement? 21st Century Coupling
PHILADELPHIA—It used to be that a transaction in which one company joined another was known as an acquisition. It was like a trade in baseball…you took off the old uniform and donned another. Ah, those were the days.
Well, as the M&A environment continues to evolve, companies are now hammering out strategic alliances that may or may not involve the exchange of rings or changing of one's maiden brand. And it seems that more deals are turning into work-share programs—split the work, share in the expenses. Competitors with benefits.
The latest to join the fray is fine papers, envelopes and specialty substrates specialist Mohawk, which yesterday revealed it was aligning with Arjowiggins Creative Papers, a global provider to the creative and technical papers spaces. As part of the agreement, the two companies will share manufacturing facilities, technologies, sales and marketing resources.
That sounds great—enhanced efficiencies, shared technologies, best practices, sales resources. In an evolving business client, you can never go wrong in running leaner and meaner. But one thing. Aren't these guys…competitors? And now, are they still competitors?
Yes, they are still competitors, but (quickly, duck the flying cliché) it's complicated. By phone from the Luxe Pack show in New York City, Mohawk's Melissa Stevens, vice president of sales, explained that the alliance goes beyond the normal sales and marketing support. "What we're doing that's really quite different is sharing intellectual knowledge/property and manufacturing expertise to truly create a global manufacturing platform," she said.
“Today’s business climate requires successful companies to exhibit flexibility, agility and adaptability to remain competitive and profitable," said Tom O'Connor, Mohawk chairman and CEO, in the announcement. "There’s been a considerable amount of consolidation in the North American and European paper industries, but there’s never been a collaborative effort like this on an international level. Mohawk’s alliance with Arjowiggins Creative Papers is a groundbreaking move to grow our businesses through better utilization of our respective sales, operational, marketing and manufacturing assets, without requiring a lot of additional investment.
"Arjowiggins has long been a respected leader in the fine paper and luxury packaging markets, and this exciting collaboration will celebrate our companies’ unique strengths and allow sharing of best practices and technologies. Ultimately, this union creates the largest premium paper and luxury packaging manufacturing entity in the world.”
Mohawk will have exclusive rights to manufacture Arjowiggins Creative Papers’ luxury packaging products, Delos and Butterfly, as well as the rights to license, market and distribute these and other select Arjowiggins Creative Papers luxury packaging products to design, packaging and print professionals in North America.
In turn, Arjowiggins Creative Papers will have exclusive rights to manufacture Mohawk Superfine with iTone, as well as the rights to license, market and distribute the product through selected merchants.
Regardless of how the transaction reads on paper or what the businesses are called, one thing is for certain. Printers, equipment manufacturers and providers of inks, substrates and other supplies, that make our wonderful, whacky world of printing continue on its merry way need every edge they can get in order to remain profitable, satisfy shareholders, retain employees and keep the lights on.
But I still wouldn't expect to see Quad/Graphics and RR Donnelley share a book plant in Des Moines, Iowa, anytime soon.