School Specialty sold for $1.5 billion

Multititle educational supplier School Specialty, long a voracious acquirer of other companies, is now the acquiree: Boston-based Bain Capital Partners has agreed to buy the Greenville, WI-based cataloger for $49 a share, or roughly $1.5 billion in cash.

Announced on June 2, the deal is expected to close by the end of October. David Vander Zanden, president/CEO of School Specialty, is expected to retain his position.

For the fiscal year ended April 30, School Specialty’s revenue topped $1.0 billion, increasing 11% from $907.5 million the previous year. But acquisitions accounted for much of that sales growth; sales in its traditional business — selling broad-line supplies to elementary, middle, and high schools — slipped nearly 1% last year. Overall internal growth was 4% for the year and 6% for the fourth quarter. Net income for the year totaled $43.0 million, compared with $40.8 million last year, a 5% increase.

School Specialty last year acquired audio-video supplies marketer Califone and the children’s publishing group from McGraw-Hill Education; in 2003 it had purchased Sunburst Video and Select Agendas. The company’s catalog brands include Sax Arts & Crafts, Frey Scientific, Sportime, Abilitations, Hammond & Stephens, and Childcraft.

Bain Capital declined to comment on the deal, but the transaction isn’t likely to suppress School Specialty’s appetite for acquisitions. Trace Urdan, senior analyst for Milwaukee-based investment firm Robert W. Baird, predicts that School Specialty will return to acquisition mode once the Bain deal closes.

The new ownership “will allow the company more freedom to follow their acquisition strategy,” Urdan says. And because School Specialty will become privately held once it’s acquired, shareholders and Wall Street won’t be scrutinizing its every transaction in search of an immediate payoff. “The company should become more opportunistic in doing strategic deals,” Urdan says.

School spending to pick up

There’s even more potential good news for School Specialty: After a few down years, Urdan says, schools and other educational buyers are increasing their spending. According to the Nelson A. Rockefeller Institute of Government, an organization that tracks state revenues and budgets, state tax revenue in the July-September 2004 grew 8.6% from the same period of the previous year. And while the National Conference of State Legislatures says financial pressures still exist within the K-12 market, most states are exceeding revenue projections, which should translate to greater expenditures on education.

School Specialty may also benefit from synergy with another Bain Capital holding: school book publisher Houghton Mifflin, of which Bain owns 40%. Bain Capital’s other holdings include Broder Bros., a wholesale cataloger of imprintable sportswear.

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School Specialty Sold for $1.5 Billion

This week, in “As the Private Equity Money Turns,” Boston-based Bain Capital Partners agreed to buy multititle educational supplier School Specialty for $49 a share, or roughly $1.5 billion in cash. As of Tuesday night, when the deal was announced, School Specialty’s stock was at $39.22 a share.

The deal is expected to close by the end of October. David Vander Zanden, president/CEO of Greenville, WI-based School Specialty, is expected to retain his position.

For fiscal 2004 School Specialty had net revenue of $907.5 million, up 4% from $870.0 million the previous year. But acquisitions accounted for much of that sales growth; sales in its traditional business segment–selling broad-line supplies to elementary, middle, and high schools–slipped nearly 1% last year. Net income for the year was $40.8 million, up from $39.6 million for fiscal 2003.

School Specialty is no stranger to acquisitions–though it’s been the buyer, not the bought. Last year it acquired the children’s publishing group from McGraw-Hill Education and audio-video supplies marketer Califone; in 2003 it had purchased Sunburst Video and Select Agendas. Its catalog brands include Sax Arts & Crafts, Frey Scientific, Sportime, and Childcraft.

Bain Capital’s other holdings include Broder Bros., a wholesale cataloger of imprintable sportwear.

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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.
Build the Foundation for Great Customer Experiences - NetSuite
Understand how consistent, timely, relevant and personalized experiences are enabled by having the right technology foundation in place.
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.