The number of direct marketing strategic transactions reached a record level during 1998, totaling 1,846 transactions valued at $29.4 billion, according to Gruppo, Levey & Co.’s annual DM Strategic Transaction Index.
Gruppo Levey reported that the number of DM strategic transactions grew 28% over 1997, marking eight continuous years of double-digit growth. Since 1990, the number has grown at an annual compound rate of 30.6%.
Despite some volatility, overall strength in the stock market fueled DM strategic transaction growth in 1998, along with an abundance of private equity dollars and the continued convergence of DM with the Internet, Gruppo Levey said.
Acquisitions represented the largest category, growing 28% to reach 602 transactions last year. Equity investments became the fastest-growing category, rising 102% to reach 178 transactions, compared to 88 in 1997.
Strategic Alliances, the second-largest strategic transaction category, grew 88% to 499 deals, compared to 265 in 1997. Initial public offerings made a dramatic comeback late in 1998, boosted by Internet IPOs from such companies as Theglobe.com, eBay Inc. and Xoom.com Inc. IPOs in the direct marketing industry leapt 72% over last year to reach 31 new stock offerings. DM bankruptcies and closings declined 13% to 35–an indication of the DM industry’s overall health.
The largest acquisition of the year was Office Depot Inc.’s $2.9 billion purchase of business-to-business cataloger Viking Office Products Inc. in August. Cendant Corp. had the second largest–$1.6 billion for National Parking Corp., a direct marketer of travel services. The top 15 acquisitions for the year were valued at $12.9 billion.
Internet services provider iXL Enterprises ranked as the most acquisitive company, completing 12 purchases during the year. Fingerhut Cos. Inc. continued to diversify its product offerings with five acquisitions, including apparel marketer Arizona Mail Order Co. Inc. and stakes in Internet marketers PC Flowers & Gifts Inc., The Zone Network and FreeShop International.
Snyder Communications Inc. completed nine acquisitions, among them the $120 million purchase of Arnold Communications Inc.
