Even his initials are M&A.
Fresh from rejecting several acquisition attempts by rival R.R. Donnelley, Quebecor World stunned the Donnelley folks this week by announcing a new chairman who knows a thing or two about mergers and acquisitions in the printing industry. And about Donnelley.
Mark A. Angelson, who retired from RRD two years ago after leading a massive acquisition drive that turned it into the world's largest printer, is to become the new Quebecor World chairman when the company emerges from bankruptcy protection and changes it name, reportedly to Novink. That is supposed to occur next month, though the U.S. government threw a fly into the ointment this week by objecting to QW's reorganization plan in bankruptcy court.
A lawyer by training, Angelson seems to live for the deal.
After bringing about the merger that created the Moore Wallace printing company, Angelson engineered the combination of Moore Wallace and Donnelley. Then in just four years as CEO at Donnelley, he led its acquisitions of Banta, Perry Judd's, and Von Hoffman, among others. His protege, Thomas Quinlan III, now heads Donnelley.
All of this leads to the obvious question: What is Quebecor World up to?
A hint came in this statement by a spokesman for Angelson and the other new QW directors: "The highly fragmented printing industry must undergo further consolidation, and this company will be an important part of that process. We look forward to providing overall strategic guidance, best governance practices and oversight."
That Donnelley-esque statement is a wake-up call for the Donnelley folks, who thought they were the ones to pursue the "strategic initiatives" to consolidate the North American printing industry. Those who crafted the proposal that Donnelley become QW's stalking-horse bidder were reportedly caught off guard by QW's responses, which amounted to "No," "No," and "Hell, no!"
Is Quebecor World audacious enough to think it can raise the capital to make a run at buying competitors? Or do the banks and other creditors who essentially own QW want an M&A guy who can get the maximum value from selling off or breaking up the company? Will Angelson remain a non-executive chairman, or will he end up running the company?
Let the games begin!
Sunday, June 28, 2009
Tuesday, June 23, 2009
Postal Service May Boost Ride-Alongs
The U.S. Postal Service is preparing some price breaks for the money-losing Periodicals class, sources tell Dead Tree Edition.
The most likely change to the Periodicals class, which is used by magazines and newspapers, seems to be a revamping of the “ride-along” pricing and regulations. Ride-alongs are items not eligible for Periodicals treatment on their own, such as product samples and catalogs, that are mailed along with a Periodicals publication.
Postal officials are likely to allow more than one ride-along per publication and to lower the prices for them, especially for ones weighing less than an ounce, sources say. Although USPS is losing money on the Periodicals class, attracting more ride-alongs would be profitable for the agency because including one in a publication hardly changes the Postal Service’s handling costs.
The rate was originally set at 10 cents per ride-along because of concerns that the Periodicals class would cannibalize the more profitable Standard class. Postal officials feared, for example, that cataloguers might just enclose items with magazines rather than mailing them separately.
The arcane formula that was established for setting the ride-along rate has caused it to rise much faster than the rate of inflation, to the current price of 16.5 cents per piece. That has kept annual volume low – fewer than 100 million pieces in the 12 months that ended in September 2008 and probably even lower this year.
It also turns out that the main interest in ride-alongs is for innovative advertisements and single-advertiser supplements, not for catalogs and other items cannibalized from Standard mail. Publishers cite advertising proposals involving seed-impregnated paper, shampoo samples, magnets, and Band-Aids as among those that have been nixed by the high cost of ride-alongs.
There has also been talk of special rates to help Periodicals publishers attract new subscribers, according to one source, but there are questions about whether to help grow a class on which USPS loses money. Some point out that Periodicals’ profitability problem is mostly a matter of fixed costs, and perhaps of a flawed USPS system for allocating costs, so additional newspapers and magazines are likely to be profitable for the Postal Service.
Since not many publishers are increasing their ratebases these days, it seems likely they would use a new-subscriber program not to grow their circulation but to displace non-mail sources of new subscribers. Some publishers tell Dead Tree Edition that they are planning to use this year’s Summer Sale on Standard Mail to obtain new subscribers who might normally come from subscription agents.
The most likely change to the Periodicals class, which is used by magazines and newspapers, seems to be a revamping of the “ride-along” pricing and regulations. Ride-alongs are items not eligible for Periodicals treatment on their own, such as product samples and catalogs, that are mailed along with a Periodicals publication.
Postal officials are likely to allow more than one ride-along per publication and to lower the prices for them, especially for ones weighing less than an ounce, sources say. Although USPS is losing money on the Periodicals class, attracting more ride-alongs would be profitable for the agency because including one in a publication hardly changes the Postal Service’s handling costs.
The rate was originally set at 10 cents per ride-along because of concerns that the Periodicals class would cannibalize the more profitable Standard class. Postal officials feared, for example, that cataloguers might just enclose items with magazines rather than mailing them separately.
The arcane formula that was established for setting the ride-along rate has caused it to rise much faster than the rate of inflation, to the current price of 16.5 cents per piece. That has kept annual volume low – fewer than 100 million pieces in the 12 months that ended in September 2008 and probably even lower this year.
It also turns out that the main interest in ride-alongs is for innovative advertisements and single-advertiser supplements, not for catalogs and other items cannibalized from Standard mail. Publishers cite advertising proposals involving seed-impregnated paper, shampoo samples, magnets, and Band-Aids as among those that have been nixed by the high cost of ride-alongs.
There has also been talk of special rates to help Periodicals publishers attract new subscribers, according to one source, but there are questions about whether to help grow a class on which USPS loses money. Some point out that Periodicals’ profitability problem is mostly a matter of fixed costs, and perhaps of a flawed USPS system for allocating costs, so additional newspapers and magazines are likely to be profitable for the Postal Service.
Since not many publishers are increasing their ratebases these days, it seems likely they would use a new-subscriber program not to grow their circulation but to displace non-mail sources of new subscribers. Some publishers tell Dead Tree Edition that they are planning to use this year’s Summer Sale on Standard Mail to obtain new subscribers who might normally come from subscription agents.
Saturday, June 20, 2009
Why U.S. Pulp Mills Are Like NBA Players
My friend the youth basketball coach cringes at mentions of the NBA because of the bad habits his players pick up from watching it.
After seeing their favorite pro player take a couple of steps before dribbling, the kids have trouble telling the difference between proper ball handling and a traveling violation. But my friend doesn't blame the NBA players.
As an environmentalist who makes a living from printed products (at my day job, not from this blog), I hate to see U.S. pulp manufacturers rake in billions of government dollars in black-liquor credits. They are accepting environmental-incentive money for doing something that does nothing for the environment, which could lead to public backlash against all paper-based products.
But I don't blame the pulp and paper companies.
It's the NBA's job to set the rules. It's the players' job to do what they can within those rules to help their team win. It's the refs' job to decide when the rules are broken.
It's the government's job to establish laws and regulations. It's a business's job to maximize its owners' return on investment while working within those laws and regulations. And it's the IRS' job to decide when a pulp mill qualifies for the black-liquor credits.
Forest-products companies are used to being on the wrong side of foolish government policies and pronouncements -- most recently California Governor Arnold Schwarzenegger's claim that digital textbooks are greener than printed ones. Can we blame them for taking advantage of a foolish government policy that for once is in their favor?
Can we, for example, criticize Domtar for its decision last week to accept the credits, which enabled it to reopen its pulp mill in Baileyville, Maine and put 300 people back to work? Can we blame the manufacturers if government policy now gives them an incentive to displace recycled pulp and mechanical pulp with kraft pulp?
Self-righteous Congressmen criticizing pulp and paper companies for accepting black-liquor credits is as hypocritical as NBA officials complaining about the sloppy dribbling of pro basketball players. If you’re in charge of making the rules, don’t complain about people who follow your crummy rules; change the rules.
After seeing their favorite pro player take a couple of steps before dribbling, the kids have trouble telling the difference between proper ball handling and a traveling violation. But my friend doesn't blame the NBA players.
As an environmentalist who makes a living from printed products (at my day job, not from this blog), I hate to see U.S. pulp manufacturers rake in billions of government dollars in black-liquor credits. They are accepting environmental-incentive money for doing something that does nothing for the environment, which could lead to public backlash against all paper-based products.
But I don't blame the pulp and paper companies.
It's the NBA's job to set the rules. It's the players' job to do what they can within those rules to help their team win. It's the refs' job to decide when the rules are broken.
It's the government's job to establish laws and regulations. It's a business's job to maximize its owners' return on investment while working within those laws and regulations. And it's the IRS' job to decide when a pulp mill qualifies for the black-liquor credits.
Forest-products companies are used to being on the wrong side of foolish government policies and pronouncements -- most recently California Governor Arnold Schwarzenegger's claim that digital textbooks are greener than printed ones. Can we blame them for taking advantage of a foolish government policy that for once is in their favor?
Can we, for example, criticize Domtar for its decision last week to accept the credits, which enabled it to reopen its pulp mill in Baileyville, Maine and put 300 people back to work? Can we blame the manufacturers if government policy now gives them an incentive to displace recycled pulp and mechanical pulp with kraft pulp?
Self-righteous Congressmen criticizing pulp and paper companies for accepting black-liquor credits is as hypocritical as NBA officials complaining about the sloppy dribbling of pro basketball players. If you’re in charge of making the rules, don’t complain about people who follow your crummy rules; change the rules.
American forest-products executives do need to understand one thing: Don’t expect any sympathy from Congress, or your customers, the next time you come around whining about how the Chinese, or the Canadians, or the Finns are subsidizing their mills and dumping their product in the
Thursday, June 18, 2009
Second Guessing on Quebecor-Donnelley
A creditor and a stock analyst are second-guessing Quebecor World’s decision to spurn R.R. Donnelley's acqusition attempts.
Quebecor World cannot show that it “fully cooperated with RRD and adequately considered the RRD offer in light of the best interests of the Debtors’ estates, rather than entrenched management’s best interests,” disgruntled creditor Riverside LLC stated in its motion to derail QW’s proposed bankruptcy-reorganization plan. Riverside, which bought unsecured claims against the big printing company from various creditors, also argued to a U.S. bankruptcy court that the plan improperly discriminates against holders of multiple claims.
A stock analyst who follows RRD predicted QW would face “a tough stretch” when it emerges from bankruptcy, scheduled for mid-July. Down the road, it may end up wishing it had accepted RRD’s offer last week to buy it, Charles Strauzer of CJS Securities told the The Canadian Press yesterday.
QW’s balance sheet will be stronger than when it filed for bankruptcy protection, but its ambitious goals will run smack into the reality of a difficult economy, the analyst said.
The court-appointed bankruptcy monitor in Canada, however, has endorsed the reorganization plan, on which creditor voting is scheduled to conclude on Monday. Ernst & Young told the court last week that the most recent Donnelley's offer "has some merit, but carries significant execution risks."
One risk to the merged company would be “a loss of customers seeking to diversify the supply chain,” the latest monitor’s report said. Indeed, some folks who do most of their printing with RRD and QW have told Dead Tree Edition they would try to move some business elsewhere so that the merged company would not have too much leverage over them.
Ernst & Young also noted that achieving regulatory approval might require that parts of QW be sold off, with unknown cost.
QW and RRD held "numerous meetings and discussions" during the four-week courtship, including an all-day meeting May 29 in Washington, DC, Ernst & Young reported. It described the discussions as "cordial and open.
QW insiders say the company's new name is to be revealed on Monday, presumably in conjunction with the reorganization plan being approved. Some media outlets have reported that the new name will be "Novink", but the insiders will only say that the name begins with "N" and has six letters.
One correspondent pointed out another name fitting that description: "NotRRD".
Quebecor World cannot show that it “fully cooperated with RRD and adequately considered the RRD offer in light of the best interests of the Debtors’ estates, rather than entrenched management’s best interests,” disgruntled creditor Riverside LLC stated in its motion to derail QW’s proposed bankruptcy-reorganization plan. Riverside, which bought unsecured claims against the big printing company from various creditors, also argued to a U.S. bankruptcy court that the plan improperly discriminates against holders of multiple claims.
A stock analyst who follows RRD predicted QW would face “a tough stretch” when it emerges from bankruptcy, scheduled for mid-July. Down the road, it may end up wishing it had accepted RRD’s offer last week to buy it, Charles Strauzer of CJS Securities told the The Canadian Press yesterday.
QW’s balance sheet will be stronger than when it filed for bankruptcy protection, but its ambitious goals will run smack into the reality of a difficult economy, the analyst said.
The court-appointed bankruptcy monitor in Canada, however, has endorsed the reorganization plan, on which creditor voting is scheduled to conclude on Monday. Ernst & Young told the court last week that the most recent Donnelley's offer "has some merit, but carries significant execution risks."
One risk to the merged company would be “a loss of customers seeking to diversify the supply chain,” the latest monitor’s report said. Indeed, some folks who do most of their printing with RRD and QW have told Dead Tree Edition they would try to move some business elsewhere so that the merged company would not have too much leverage over them.
Ernst & Young also noted that achieving regulatory approval might require that parts of QW be sold off, with unknown cost.
QW and RRD held "numerous meetings and discussions" during the four-week courtship, including an all-day meeting May 29 in Washington, DC, Ernst & Young reported. It described the discussions as "cordial and open.
QW insiders say the company's new name is to be revealed on Monday, presumably in conjunction with the reorganization plan being approved. Some media outlets have reported that the new name will be "Novink", but the insiders will only say that the name begins with "N" and has six letters.
One correspondent pointed out another name fitting that description: "NotRRD".
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