The fourth quarter is rarely a hotbed of mergers and acquisitions activity, and the final three months of 2005 was no exception: Just 13 deals took place. Still, that’s a slight improvement from the previous fourth quarter, when only 11 deals went down.
“The level of deal-making across all consumer sectors continued to be fairly anemic,” says Craig Battle, managing director of Princeton, NJ-based investment bank Tucker Alexander, which tracks transactions for Multichannel Merchant. But he notes there is activity with larger consumer cataloger/retailers, as private equity groups pursue sector roll-ups, and media companies and large retailers continue to build out their multichannel strategies.
Case in point: A pair of November deals involving San Francisco-based Golden Gate Capital Corp., which purchased two apparel cataloger/retailers — Beverly, MA-based Appleseed’s and Irvine, CA-based Draper’s & Damon’s. Golden Gate is the same private equity firm that purchased the Spiegel and Newport News catalogs in 2004. “Golden Gate Capital, a large private equity group, is aggressively rolling up mature women’s apparel catalog retailers,” Battle says.
Look for this trend of purchases by private equity groups to continue, Battle adds, as many are enamored with positioning catalog companies as multichannel platforms. In addition, most private equity groups have substantial capital under management that must be invested in a relatively short time frame.
1-800-Flowers shines on Wind & Weather
When: October The facts: Westbury, NY-based gifts merchant 1-800-Flowers.com acquired the assets of Fort Bragg, CA-based Wind & Weather, a cataloger of weather instruments and, in Battle’s words, “a diverse offering of gifts and home and garden decor with a connection to nature.” That makes Wind & Weather a good fit with 1-800-Flowers.com’s Madison, VA-based Plow and Hearth catalog, which sells products for the home and garden to a similar demographic. The skinny: 1-800-Flowers.com CEO Jim McCann credits Wind & Weather’s “product-line extension in weather-related gifts” with boosting the company’s sales of home and garden gifts for the quarter ended Jan. 1.
Lawson Products picks up Rutland Tool
When: November The facts: Radnor, PA-based Airgas, a supplier of medical gases and industrial supplies, sold the assets and operations of $47 million Whittier, CA-based Rutland Tool & Supply Co. for $15 million. The buyer is Des Plaines, IL-based Lawson Products, a supplier to the maintenance, repair, and operation marketplace. Rutland distributes metalworking tools and machine parts, a product line that doesn’t fit in with Airgas’s core business. The skinny: Rutland will expand Lawson’s product line into the machine-tool sector and build its presence on the West Coast.
Liberty Media welcomes Provide Commerce
When: December The facts: Englewood, CO-based Liberty Media, which owns the QVC home shopping network, bought San Diego-based print and online cataloger Provide Commerce in a deal worth $477 million. Provide’s titles include ProFlowers, fruit and produce merchant Cherry Moon Farms, and meats seller Uptown Prime. Liberty Media’s other holdings include Encore, Expedia, and News Corp.; it also owns a minority stake in IAC/Interactive Corp., the parent company of shopping network HSN and the Cornerstone Brands catalogs. In fact, says Battle, the acquisition is “very consistent with the IAC/HSN model, offering products through a powerful multichannel engine.” The skinny: The parent companies of QVC and HSN will likely continue “to buy online/catalog companies to enhance their multichannel offerings,” Battle says.
| Company | Market segment | Buyer/investor | Investment form | Est. price (in millions) | |
|---|---|---|---|---|---|
| OCT. | Wind & Weather | Weather instruments/gifts | 1-800-Flowers.com | Acq. of assets | N/A |
| Amherst Technologies | IT solutions | PC Connection | Acq. of assets | $7.8 | |
| NOV. | A.B. Lambdin | Women’s apparel | ABL Holdings Corp. | Acq. of assets | N/A |
| Country Supply | Equine supplies | Pets United | Acq. of assets | N/A | |
| Appleseed’s | Women’s apparel | Golden Gate Capital Corp. | Acq. of assets | N/A | |
| Draper’s & Damon’s | Women’s apparel | Golden Gate Capital Corp. | Acq. of assets | N/A | |
| eCost.com | General merchandise | PFSweb | Stock purchase | $29.0 | |
| Rutland Tool & Supply Co. | Tools and supplies | Lawson Products | Acq. of assets | $15.0 | |
| Mail Order Medical Supply | Medical supplies | Home Delivery Incontinent Supp. Co. | Acq. of assets | N/A | |
| National Business Furniture | Office furniture | Takkt | Acq. of assets | $80-$100 | |
| DEC. | Provide Commerce | Flowers and food baskets | Liberty Media | Acq. of assets | $477.0 |
| SkyMall | General merchandise | Spire Capital/Zelnick Media Corp. | Acq. of assets | $52.0 | |
| Worldwide Excellence | Health, beauty, and fitness | MFC Development Corp. | Stock purchase | $1.5 | |
| Source: Tucker Alexander, compiled from public information and other nonconfidential sources | |||||