DM Deals Hit $38 Billion in ’97 The combined value of strategic direct marketing transactions-including mergers, acquisitions and buyouts-reached $38 billion in 1997, according to a study by New York-based investment firm Gruppo, Levey & Capell.
This 52% increase (from $25 billion in 1996) marks the seventh consecutive increase. The sheer number of transactions also rose-from 1,303 in 1996 to 1,416 in 1997. “Industry segments such as cataloging, telemarketing and lettershop services underwent and continue to go through significant consolidation,” said Harry Chevan, a senior vice president with Gruppo, Levey & Capell. “In addition, computer service providers’ growing sophistication in list segmentation and analysis opened marketers’ eyes to the significant synergies that could be gained in strategic alliances.” According to the report, mergers, acquisitions and buyouts increased to 554 in 1997, a 19% increase over the 465 deals reported in 1996. The number of strategic alliances and joint ventures increased by 27%, from 252 such transactions in 1996 to 319 in 1997. New ventures, however, were stagnant, with the 472 recorded in 1997 virtually identical with the 475 launched in 1996. Initial and secondary public offerings showed significant decline, with the 30 reported in 1997 a far cry from the 70 noted in 1996. On the plus side, the number of bankruptcies and closings decreased from 41 in 1996 to 39 in 1997. Gruppo, Levey & Capell foresees 1998 to be a robust year in deal-making and predicts an overall increase of 10%.
APAC to Acquire ITI Marketing Services Teleservices provider APAC TeleServices Inc., Deerfield, IL, has signed an agreement to acquire ITI Marketing Services Inc., reportedly making the company the nation’s largest teleservices firm with over 14,000 workstations and combined annual revenue of more than $492 million. In exchange for 100% of the outstanding equity of ITI, APAC will pay $155.2 million in cash subject to certain adjustments. The acquisition was expected to close in May. APAC chairman/ CEO Theodore G. Schwartz will continue his role in the expanded company, and Marc S. Simon will remain as president/COO. Reporting to Simon will be ITI’s president and CEO, Raymond R. Hipp, who will have added responsibility for the integration and consolidation of the two companies. Hippwill also be nominated to join APAC’s board of directors. Joining Hipp will be ITI’s entire executive team. In the near term, APAC and ITI will continue to serve clients through their respective organizations. As operating efficiencies are identified and new opportunities emerge, the company will consolidate redundant functions.
NEBS to Purchase McBee Systems New England Business Service Inc., Groton, MA, will acquire McBee Systems Inc. and McBee Systems of Canada Inc., both wholly owned subsidiaries of ROMO Corp. of Lakewood, CO. McBee manufactures and markets a line of checks and related products to small businesses.
Under the terms of the agreements, NEBS will acquire 100% of the stock of the U.S.-based company and all of the assets of the Canadian company for total consideration of $63 million, of which up to 20% may be in the form of NEBS stock.
McBee sells checks and check-writing systems to over 300,000 small business customers through a 350-member sales force in North America. NEBS designs and produces business forms and distributes packaging, warehouse supplies, retail merchandising supplies and other products through mail order, direct sales and dealers.
Tom Brady Retires Tom Brady, co-founder of Kobs & Brady Advertising, now DraftWorldwide, has retired. He is also a former member of the Chicago Association of Direct Marketing’s board of directors as well as a former member of the Direct Marketing Association’s Echo Award Committee.
MGM Enters Catalog Business Hollywood studio Metro-Goldwyn-Mayer Inc. will start a consumer-products division, called MGM Brand Portfolio, for items not necessarily connected with its movies. It also plans to launch a catalog with Neiman Marcus Direct this fall to sell some of the products. MGM will offer everything from chocolates in the shapes of top hats to home furnishings.
Cendant to Acquire British Auto Club Cendant Corp., Stamford, CT, has entered into a letter of intent and exclusive negotiations with the Royal Automobile Club Ltd. to acquire its RAC Motoring Services business. The price is approximately $750 million. RAC provides parts, roadside assistance and driving lessons for British motorists. Cendant has just completed the purchase of National Parking Corp. Ltd., also based in the United Kingdom.
Discover Offers Internet Access The Discover Card is going into the Internet-access business. The Discover Connection Internet Service, created through an alliance with EarthLink Network Inc., Pasadena, CA, and Planet Direct, Andover, MA, allows card holders to receive unlimited Internet access, personalized content, merchandise discounts and customer service support for a flat monthly fee of $19.95. In addition, it will offer personalized content.
Ogilvy Wins Royal Mail Account Royal Mail U.S. Inc. has selected OgilvyOne Worldwide to develop and launch a direct mail campaign for the incorporated subsidiary of Royal Mail in the United States. OgilvyOne will also develop telemarketing and print ad efforts as well as consult on a series of joint seminars. In London, OgilvyOne and Royal Mail have worked together for about seven years. OgilvyOne is a $1.4 billion subsidiary of Ogilvy & Mather, a unit of WPP Group plc. Royal Mail is a subsidiary of the British Post Office that provides international bulk mailing services to companies in North America.