ST IVES' U.S. DIVISION -- Adding to the Equation
BY ERIK CAGLE
It has been said by many a merger and acquisition prognosticator that modern-day deals need to do more than bring aboard added sales dollars. Today's deals need a reason to exist.
Long before the September 11 terrorist attacks and the subsequent retaliatory strikes, the economy had been in a sustained, downward spiral. The Federal Reserve's slicing of interest rates has registered barely a blip on the radar screen. It doesn't take a newspaper or even an industry magazine to realize that there is a recessional fear and a disturbing degree of uncertainty gripping the nation.
Not surprisingly, any merger or acquisition in the commercial printing industry that transpires during the current climate needs to be the proverbial strategic fit. The poster child of such transactions is the marriage of Avanti/Case-Hoyt to St Ives, which took place earlier this year. St Ives acquired the outstanding common stock for a cash consideration of $42 million in February. The deal comes roughly eight years following the merger of Avanti and Case-Hoyt.
This Year's Big Deal
The acquisition was one of, if not the, largest deals in the industry in 2001—Avanti/Case-Hoyt posted sales of $109 million in 2000 while St Ives checked in around the $115+ million range. It also gave St Ives plc, the London-based worldwide printing stalwart, strategic positions in Rochester, NY, and Miami to complement its existing U.S. holdings in Cleveland and Hollywood, FL.
The newly formed company has 1,350 employees and is projecting sales of $224 million for the fiscal year ending July 31, 2001.
According to Gary Davis, senior vice president and general manager of St Ives Cleveland, the pairing represented a matchup with numerous benefits. "The acquisition was a strategic fit for several reasons," he remarks. "Avanti and Case/Hoyt were well-regarded entities in their fields. Avanti has a solid reputation within the cruise and retail markets, and Case/Hoyt in high-end financial publications, brochures and the like.
"As compared to the existing St Ives Hollywood and St Ives Cleveland facilities, there was not a lot of account overlap," Davis adds. "We found that our Cleveland location was a good fit for the strong presence that Avanti has with retail marketers. Full, high-quality manufacturing; ink-jet addressing, personalization and mailing; as well as Midwest access to mail and distribution streams afford retail marketers with a cost-effective solution for their needs."
St Ives plc has seven divisions, including its U.S. Division, which began in 1989 with its acquisition of Hollywood, FL-based A.D. Weiss. The Cleveland branch was annexed in 1996 with the acquisition of Perlmuter Printing. Avanti/Case-Hoyt is the latest step in the company's ongoing commitment to expanding its breadth of services.
"Avanti/Case-Hoyt was attractive to us as a means of expanding our commercial printing base with an impressive customer list, and for its creative and printing capabilities," states Wayne Angstrom (pictured), president and CEO of St Ives' U.S. Division. "It increased our spread of business and expanded the ability to service customers with greater manufacturing capabilities. The in-house creative design and production capability allowed us to offer a new service to direct mail, catalog and retail customers."
The Miami and Hollywood, FL, locales augment the overall service package with the aforementioned creative services, which includes digital photography studios for the three segments. Advertising creative services aid customers in creating ad and sales programs, while the in-house staff of account managers, photographers, graphic designers and copy writers provide comprehensive design and production capabilities.
The Cleveland plant features sheetfed and web offset printing, with an extensive fulfillment operation. The Rochester, NY, facility also boasts sheetfed and web capabilities, digital prepress, along with personalization, mailing and demographic distribution.
"It's really been an exciting time here," notes industry veteran Mike Stought, senior vice president and general manager of St Ives Hollywood, who joined the company earlier this year. "This move has made the company more geographically diversified. In retrospect, the merger was very good timing (in respect to the economy). The opportunity for St Ives to embrace high-end printing was most compelling."
St. Ives executives, from the left, include: Ed Murphy, VP/commercial services; Jeanne Caruana, CFO; Gene Martinez, president; Renny Tirador, chief creative officer; Mark Angstrom, senior VP/sales; Mike Stought, VP/GM; and Efrain Mendoza, creative director.
A Strong Union
Gene Martinez, president of Avanti/Case-Hoyt, believes that the union between the two companies allows each to have a greater arsenal in bringing the necessary products and services to clientele in a competitive marketplace.
"We have units that complement each other tremendously," he remarks. "Avanti brought the mentality of a full-service printer; what we call a 'turn-key' mentality. We strongly believe that the printing world has expanded beyond just having the ability to put ink on paper. In order to grow in today's environment, you must be able to offer your clients more services than just printing.
"You now have, under the St Ives umbrella, a dynamic combination that has joined together Avanti/Case-Hoyt—a company with tremendous experience in creative, photography, manufacturing and distribution—with St Ives, which has tremendous experience in many areas of print manufacturing on an international basis," Martinez adds.
St Ives may not be recession proof (and who is?), but its most recent diversification prevents it from overloading the basket with eggs. Jeanne Caruana, CFO, believes the company is well-equipped to weather the most recent economic storm.
"The economic impact of the September 11 terrorist attacks has, of course, affected us all," she says. "The tentative manufacturing segment in the United States, pre-September 11, presents an even greater challenge in a post-September 11 economic climate where our customers struggle to reposition themselves in their respective markets.
"Fortunately, St Ives' customer base and markets served represents a broad spectrum of industries, thereby minimizing the impact of any single market," Caruana adds. "However, having said that, our outlook for growth in the next 12 months is somewhat guarded. Our goal is to remain focused on providing solutions for our clients as they struggle through these times, working 'with' them and not just 'for' them.
"With that approach, we will continue to seize opportunities with regard to cost containment and synergies presented by our recent acquisition," she says. "And we will continue to implement technological solutions that provide real returns in terms of productivity, customer service and solutions."
One manner in which to counteract the lackluster economy is by increasing sales with existing accounts, notes Hoshi Deboo, senior vice president and general manager of Case-Hoyt. In this manner, customers are able to "leverage our total bundle of services and value additions," he says.
The company can further differentiate itself from the competition through the use of technology and by becoming a value provider to St Ives' customer base, Deboo adds.
Angstrom reaffirms that the company is concentrating on increasing its slice of the pie in markets it currently serves. To this end, St Ives recently updated its creative studios to full digital photography capabilities. An archiving solution is also being designed that will afford clients the ability to better manage images for production or repurposing.
No More Proofs
Additionally, the company has installed eight closed-loop color control press systems, allowing customers who have complete digital interface capabilities to complete press production without the expense of color proofs.
"Since we believe this digital transition will continue, we have also begun providing remote proofing at customers' locations," Angstrom states. "All of this, we believe, will help print to remain competitive, providing a sensible means of communication well into the future."
Like every other head of a commercial printing business, Angstrom is facing the harsh reality of the current economy. Clients are often delaying or reducing their print schedules, and publishing page counts are down as advertising spending continues to dry up.
This leaves the St Ives U.S. Division president and CEO few options but to continue investing in customer service and capabilities. The best way it can adhere to the company's "Delight Our Customers" mantra, he says, is to remain as flexible as possible.
"The next 18 months look to be fairly challenging as our country struggles to improve the basic economy," Angstrom predicts. "The uncertainty of these times is putting pressure on most of our customers and, like us, they are looking for ways to be more cost-effective in the absence of significant opportunities to increase sales. We all must improve our positions by creating more efficient means of manufacturing that afford value.
"We have, in fact—as a team, a division and a group—been successful," Angstrom adds. Future success will require that St Ives performs for its customers in a way that they will see it as a solution to their requirements, according to Angstrom. "As we continue to invest in new technology, we need to be certain we are pursuing the right direction for these customers.
"People ask us if we are a manufacturing-led or a sales-led company. Over the years, my response has changed to saying neither; we are a customer-led company."