Transcontinental Inc. -- Growth on the Horizon
The company made significant inroads on its growth by acquisition initiative with the December 2003 purchase of U.S. direct marketing specialist CC3, a (U.S.)$127 million business that delivers 1.5 billion marketing pieces per year.
|An innovative management structure at several of Transcontinental's newspaper plants increases efficiency.|
The following month, Transcontinental Inc. announced it had purchased more than 99 percent of the stock of Optipress, which owns 25 weekly and bi-weekly newspapers, nine printing plants and a network of digital reproduction centers in Canada. The cash considerations for the two businesses totaled (C)$223 million.
Direct Marketing Focus
"CC3 is an excellent company. In the right sector, part of our plan was to get more involved in direct marketing," states Remi Marcoux, chairman of the board of Transcontinental. "In the United States, direct marketing is an industry that is not concentrated yet. For us, it's a niche with high growth potential. The DMA (Direct Marketing Association) is forecasting a growth rate of more than 6 percent for the coming year.
"We targeted CC3 for two reasons: first, we intended to grow in that niche in the United States. Second, CC3 has developed many services that complement our own printing business. We intend to continue to develop those services for many of our printers. They offer data management, direct marketing printing, as well as lettershop and fulfillment services. It's a complete offering for large customers."
Marcoux notes that, historically, Transcontinental's business has been generated via two-thirds acquisition and one-third internal growth. The company's short-term objective is to integrate the two acquirees, but Transcontinental is still on the lookout for opportunities that align with its growth proposition—U.S. direct marketing, newspaper printing outsourcing in North America, sheetfed printing in Canada and book printing in the United States.
"Our M&A department is still looking to buy, but the acquisition process—including the evaluation—takes time," Marcoux states. "We have a very good M&A department looking for additional business, and they're also part of the team that does the integration. Optipress is a good fit for us, especially with the assets that we already have in the Atlantic region. It complements our daily and weekly newspapers."