Print management – Sector seeks diverse new roles to play
As print managers move into mail and logistics, Barney Cox asks what else we can expect.
Last week's deal by Deutsche Post for a 51% stake in Williams Lea raised questions about how printers and print management firms fitted into a broader market serving bus-iness communications needs.
As soon as the deal was done, eyes turned to Communisis, the last of the "big three" print management market alongside Williams Lea and Astron not to have yet been snapped up. Its recent announcement that talks with a potential buyer had ceased has done little to halt speculation that it is the next acquisition target in this sector. And with the ongoing review of Adare's business there is a real possibility that its print management businesses may be in the hands of a new owner before too long.
Williams Lea chief executive Tim Griffiths says his company had "a lot of interest from firms in the US and Europe", suggesting there are a number of suitors that are still searching for a similar target. Global logistics and mail firms such as UPS and FedEx, which owns quickprint chain Kinko's; deregulated European postal operators such as TNT and the services wings of the likes of Oce and Xerox are all potential players. And, now it has a new backer, it would be foolish to rule out Williams Lea itself, with Griffiths saying acquisitions will continue.
Scale and services
One word that keeps cropping up is scale, so expect a round of consolidation as other print managers get together to make themselves more attractive to potential customers, partners and owners. The other word that keeps emerging is services. "There is only so far you can go in cutting print costs," says TripleArc chief executive Jason Cromack. "The next step is cutting costs of communicating with customers." Which is where Williams Lea has been successful, its document process outsourcing business goes beyond being hung up purely on the price of the print. It is that broader view that has led to the interest in firms such as Williams Lea and Astron from Deutsche Post and RR Donn-elley respectively. Deriding them as print farmers or brokers is like tipping at windmills and much as one might dislike the whiff of business bullshit about terms such as document or business process outsourcing and corporate information solutions, they do neatly define what is done.
And it is a potentially huge market whether you describe the product as a document, corporate information or Mailstream, the term coined by Pitney Bowes that defines "the flow of traditional and digital mail, documents and packages to and from an organisation". Which sounds like what you get when you combine a logistics firm with a document management firm.
Under that banner, Pitney Bowes claims to have identified "£143bn ($250bn) in opportunities resulting from helping organisations worldwide manage and integrate their mail and document streams". According to those figures, Williams Lea's £450m turnover is relatively small. But not for long, if Griffiths' plans pan out. InfoTrends associate director of document outsourcing service Brian Miller says: "Astron and Williams Lea could both be £1bn firms within five years."
"If it was £1bn within five years, I'd be disappoint-ed," says Griffiths. "We've doubled size every two years, and I hope we can accelerate."
He sees a massive potential. "In Europe there is a lot of ground, as is the case in Japan and China, and in the US there is room for significant growth," he says.
Backing the business
When private equity backer 3i indicated that it had taken its investment as far as it could, the firm began to look for a new backer. "We (the senior management) didn't want to get out, and neither did the Williams family," he says. "It was never about cashing in, we needed capital to take it forward."
Commentators made much of the comparison between the headline price of the deal and that of Astron's $1bn deal. "Deutsche Post got a bargain, and conversely David Mitchell did very well," says InfoTrends Miller.
But look beyond the headline figures and a different picture appears. Deutsche Post took a 51% stake, which included buying 3i's 38% stake for £110m. The deal valued Williams Lea at £450m, including £100m of debt. By comparison, RR Donnelley eventually paid £546m for Astron, which included £258m of debt, making the true price paid for the business £288m. There is a potential end point in five years' time when Deutsche Post can gain 100% ownership but, Griffiths adds, there is also the possibility both parties may carry on with the current situation.
As for the tie-up with Deutsche Post, it's not necessarily a shoo-in for Deutsche Post to win its clients' logistics work. It's more likely to be the other way around. "We're not obligated to use their services but they have clients that want BPO services," he says. But he acknowledges that as Williams Lea wins bigger contracts, the more they include mail and logistics.
The firm doesn't have any plans to move away from buying in print, except for transactional documents that it can produce at its Scottish and East Anglian operations, and yes, he does expect those to include marketing messages in the future.
"I don't think we'll buy presses again – we've got great suppliers in the UK," he says, and adds: "It's crucial to have a stable supply chain." Which is a world away from the view of a broker riding overcapacity to squeeze its suppliers for every possible price reduction.
Griffiths is optimistic about the place print has in the market. "Print continues to evolve and suppliers continue to engage with customers like us," he says. "I'm very positive and if I was in the broader print industry, I'd be excited."
