Mergers & Acquisitions

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.”

fourth quarter 2000 catalog industry transactions
Company price Market segment Buyer/investor Investment form Est.
(in millions)
OCTOBER
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
NOVEMBER
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
DECEMBER
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.

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Mergers & Acquisitions

Busy Fourth Quarter for Deal Makers 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.”

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.

Partner Content

The Gift of Wow: Preparing your store for the holiday season - Netsuite
Being prepared for the holiday rush used to mean stocking shelves and making sure your associates were ready for the long hours. But the digital revolution has changed everything, most importantly, customer expectations. Retailers with a physical store presence should be asking themselves—what am I doing to wow the customer?
3 Critical Components to Achieving the Perfect Order - NetSuite
Explore the 3 critical components to delivering the perfect order.
Streamlining Unified Commerce Complexity - NetSuite
Explore how consolidating multiple systems through a cloud-based commerce platform provides a seamless experience for both you, and your customer.
Strategies for Maximizing Mobile Point-of-Sale Technology - NetSuite
Learn the top five innovative ways to utilize your mobile POS technology to drive customer engagement, increase sales and elevate your brand.