With five acquisitions, networking solutions provider Black Box Corp. was the busiest deal maker of the quarter.
The economy may have stalled, but catalog-related mergers and acquisitions have taken off. During the fourth quarter of 2000, a whopping 33 deals were consummated, nearly double the 18 deals completed in the fourth quarter of 1999.
Craig Battle, a principal at Princeton, NJ-based investment bank Tucker Alexander, says that sellers outnumber buyers. “The operating environment out there is terrible,” Battle says. “In general, banks are not financing growth, and equity investors seem to be cooling.”
Nor are many catalog companies looking to acquire a stable of disparate titles, as was the case with companies such as Hanover Direct and Genesis Direct in years past. “Roll-up strategies are dangerous,” Battle says. “Assimilating a family of catalog businesses seldom works, for a variety of reasons.”
|Company price||Market segment||Buyer/investor||Investment form Est.
|Holt’s Cigar Holdings||Cigars||HCH Acquisition Corp.||Acq. of assets $7.0|
|J. Peterman||Apparel||Kenneth Cole Productions||Acq. of assets $2.0|
|Person-to-Person Communications||Telecommunications||Black Box Corp.||Acq. of assets N/A|
|Hello Direct||Telecommunications||GN Netcom||Acq. of assets||$95.0|
|Fogdog Sports||Sporting goods||Global Sports||Stock purchase||$38.0|
|HMS Jewelry Co.||B-to-b jewelry||GoldOnline International||Acq. of assets $4.5|
|Smiles Communications Systems||Telecommunications||Black Box Corp.||Acq. of assets N/A|
|Aqua Design||Pet supplies||Quelle||Acq. of assets||N/A|
|Pussy-Versand||Pet supplies||Quelle||Acq. of assets||N/A|
|Learning Co.||Educational software||Gores Technology Group||Acq. of assets N/A|
|L’Art de Vivre||Luxury goods||RRE, Charles River, N. Bridge Partners, Rolaco Srvcs.||Equity Investment $8.0|
|PetSmart.com||Pet supplies||PetSmart||Acq. of assets||$20.0|
|Mail Order Wizard and Castle||Software provider||Smith-Gardner||Acq. of assets||N/A|
|Profit Pro||Automotive software||Wrenchhead||Acq. of assets||N/A|
|J.L. Hammett Co.||B-to-b school supplies||School Specialty||Acq. of assets||$75.0|
|Fatbrain.com||Publications||Barnes&Noble.com||Stock purchase $61.7|
|WM. E. Wright||B-to-b textiles||Conso International||Acq. of assetsN/A|
|Simon Direct||Alternative media marketer||Direct Media||Acq. of assetsN/A|
|Russell Badge||Promotional items||Hodges Badge Co.||Acq. of assetsN/A|
|Orchard Network Solutions||Telecommunications||Black Box Corp.||Acq. of assets||N/A|
|Societé Industrielle de Telephonie||Telecommunications||Black Box Corp.||Acq. of assetsN/A|
|Seafood.com||Food||TradingProduce.com||Acq. of assets N/A|
|LANmark Communications||Telecommunications||Black Box Corp.||Acq. of assets||N/A|
|Tandy Leather/TLC Direct||Leather goods||The Leather Factory||Acq. of assets $3.0|
|Novica.com||Arts and crafts Items||National Geographic||Equity InvestmentN/A|
|Musicians.com||Musical equipment||Guitar Center||Equity investment $3.0|
|Fancy Foods Gourmet Club||Food||Gourmet Group||Acq. of assets||N/A|
|NetCreations||Marketing services||Seat Pagine Gialle||Acq. of assets||$111.0|
|Adventures in Advertising||Promotional items||4imprint||Acq. of assets||N/A|
|Nicole Summers||Women’s apparel||The Mark Group||Acq. of list||N/A|
|The Land of Nod||Children’s furniture||Crate & Barrel||Equity investment||N/A|
|Real Goods Trading Corp.||Environmental products||Gaiam||Stock purchase $8.7|
|SelfCare||Health and wellness products||Gaiam president/CEO Jirka Rysavy||Acq. of assets $3.5|
|Source: Tucker Alexander, compiled from public information and other nonconfidential sources|
Because a catalog company is often the brainchild of an entrepreneur, assimilating the newly acquired company into the parent to achieve back-end or database synergies often destroys its unique spirit and ultimately dampens sales. Then, too, many acquiring companies underestimate the cost of integrating a new catalog and the staff turnover that sometimes results.
CATALOG AGE’S DEALS OF THE QUARTER
School Specialty acquires certain assets of J.L. Hammett Co.
Date announced: November 14, 2000
Purchase price: $75 million
What it means: In buying all but the stores and chartered-school business of Braintree, MA-based school products supplier J.L. Hammett, School Specialty has in essence acquired its largest competitor. The deal includes a Lyons, NY-based call center and distribution center; a Southhaven, MS-based distribution center, and a 60-person national sales force. “This is a field-sales-focused deal,” says School Specialty president/chief operating officer Dave Vander Zanden. “J.L. Hammett fills in certain geographic holes, especially in the East and Texas.”
The skinny: The $671 million Appleton, WI-based school supplies giant will not fold the J.L. Hammett general school school supplies catalog business into its own until January 2002.
The Mark Group buys the Nicole Summers list
Date announced: December 2000
Purchase price: not disclosed
What it means: Quietly, Boca Raton, FL-based The Mark Group, which mails the Boston Proper, Charles Keath, and Mark, Fore & Strike apparel and gifts catalogs, bought more than 1 million names from Hingham, MA-based J. Jill Group, the parent company of the now-defunct Nicole Summers women’s apparel catalog. Seth Miller, executive vice president/chief operating officer for The Mark Group, says the demographics of the Nicole Summers buyers mirror those of Charles Keath and Mark, Fore, & Strike customers.
The skinny: The Mark Group did not acquire the Nicole Summers name and has no intention of reviving the Nicole Summers catalog. Miller describes early results from the names as “very encouraging. The list performs more like a house file than a prospect file.”
L’Art de Vivre gets a cash infusion
Date announced: October 2000
Amount invested: $8 million
What it means: The equity investment, funded by a group that includes RRE Ventures, Charles River Ventures, North Bridge Venture Partners, and Rolaco Services, will allow New York-based luxury goods marketer L’Art de Vivre to broaden its catalog and online businesses.
The skinny: Founder/CEO Eva Jeanbart-Lorenzotti says some of L’Art de Vivre’s initiatives include the March launch of a spin-off catalog, Vivre, to be distributed in the rooms of “leading hotels of the world,” and the development of corporate gifts programs with businesses such as American Express.
Crate & Barrel invests in The Land of Nod
Date announced: December 2000
Investment amount: not disclosed
What it means: Chicago-based home decor items cataloger/retailer Crate & Barrel’s partnership with Wheeling, IL-based The Land of Nod enables the four-year-old cataloger of children’s furnishings to expand its mailings and relaunch its Website.
The skinny: As the success of Pottery Barn Kids proves, children’s furniture is a hot niche. “It’s an obvious place for [Crate & Barrel] to go,” Battle says.