Finance: More Distress, More Deals

Sep 01, 2008 9:30 PM  By

The Second Quarter Saw Some Action in terms of mergers and acquisitions. Twenty transactions were recorded for the period, compared with 14 for the quarter of 2007. The slow economy, combined with rising costs, has resulted in several distress sales — such as Lillian Vernon, Sharper Image and Celebrate Express. There might have been more deals if not for the recent credit crunch, says David Solomon, co-CEO of New York-based investment firm Lazard Middle Market, which tracks transactions for Multichannel Merchant.

Current USA acquires Lillian Vernon

When: April The facts: Lillian Vernon Corp., which had filed Chapter 11 in February, was sold to Current USA, a subsidiary of Taylor Corp., $15.8 million. Most of Lillian Vernon has moved to Current’s Colorado Springs, CO, facility, except its distribution center in Virginia Beach. The skinny: Taylor Corp. will have good synergies with Lillian Vernon, Solomon says. “Lillian struggled with the complexity of its personalization platform.” If you can’t fulfill it, “you’ll have problems on margin sides by driving up fulfillment costs.”

1-800-Flowers.com Buys DesignPac

When: April The facts: Multititle mailer 1-800-Flowers.com acquired gourmet gift baskets marketer DesignPac Gifts for $36 million. DesignPac will retain its senior management and become a wholly owned subsidiary of 1-800-Flowers.com, which includes the HearthSong, Plow & Hearth, The Popcorn Factory, and Cheryl & Co. catalogs. The skinny: The deal will enable 1-800-Flowers.com to improve its gourmet gift bag offering. “It gives them design and sourcing capability,” Solomon says.

Liberty Media gets Celebrate Express

When: June The facts: Party gear and costumes merchant Celebrate Express was sold to holding company Liberty Media for $31 million in cash. Celebrate Express will be folded into Buyseasons.com, a Web retailer acquired by Liberty Media in 2006. The skinny: “Liberty is putting together a powerhouse in Internet,” Solomon says. “That’s where all the action is in retail, because catalogs are suffering under heavy postage and paper costs.”

2Q 2008 CATALOG INDUSTRY TRANSACTIONS
Company Market segment Buyer/investor Investment form Est. price (in millions)
APRIL Gerard & Dominique Seafoods Seafood products Seabear Co. Acquisition
DesignPac Gifts Gourmet gift packs 1-800-Flowers.com Acquisition $36
Hobby Horse Clothing Western show apparel and accessories Dover Saddlery Acquisition $0.40
Lillian Vernon Personalized gifts Current USA Acquisition $15.80
Pittman & Davis Orchard fruits, gourmet items Hale Indian River Groves Acquisition
MAY Bits and Pieces Gifts and games Gardens Alive! Acquisition
MacKenzie-Childs Tabletop ceramics Twin Lakes Capital Acquisition
MH&SC Healthcare and safety products Vision Opportunity Capital Management Acquisition $0.50
Sharper Image Corp. High-tech gifts, gadgets Hilco Consmr. Cap. Corp. & Gordon Bros. Grp. Acquisition $49
JUNE Arrington Police Distributors Public safety and police equipment Streicher’s Acquisition
Celebrate Express Party supplies and costumes Liberty Media Interactive Acquisition $31.20
Corporate Express Office products Staples Acquisition $2,600,000
Dahle’s Big and Tall Men’s clothing Casual Male Retail Group Acquisition
Lash International Aftermarket automotive products Eckler Industries Acquisition
MH&SC Healthcare and safety products Juhl Wind Acquisition
Nau Lifestyle apparel manufacturer/marketer Horny Toad Activewear Acquisition
Oilind Safety Rental safety equipment and services Airgas Acquisition
Red Envelope Gifts Provide Commerce Acquisition
Refron Refrigerants Airgas Acquisition
R. & R. Manufacturing Electronic hardware components MW Industries Acquisition
Sources: Lazard Middle Market/MCM