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e n x Charles Brewer

News Briefing

Once Again, Supplies Vendors Find the Urge to Merge Irresistible

T

en years ago, the U.S. supplies industry was in the midst of rapid growth and change. Demand for cheaper, non-OEM cartridges exploded across channels. Retailers including consumer electronics outlets, mass merchants—even pharmacies and grocery stores—devoted more shelf space to the category and office superstores along with various distributors offered an increasing selection of brands and SKUs. Remanufacturers discovered that outsourcing production to Asia, Latin America, Eastern Europe, and other regions could be more profitable than manufacturing products in the States and many began to shut down lines and limit manufacturing capacity. Consolidation was also rampant, as established thirdparty supplies vendors looked to grow through acquisition, and banks and other investors lined up to put their money into the white-hot industry. All the frenetic activity began to abate after a couple of years, however. While industry consolidation continued well into the Great Recession, the blush was off the bloom. With the exception of office superstores, most retailers removed third-party supplies from their brick-and-mortar stores and focused exclusively on selling OEM SKUs. Cartridge consumption fell as print volumes nosedived during the economic downturn and some of the reman industry’s most well-known firms including Nukote and Rhinotek floundered. Banks grew stingy after the recession and most investors were no longer interested in placing bets on the declining hardcopy market. Unable to secure

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operating capital, a number of third-party supplies vendors were forced to fold up their tents. But, things appear to be changing again. Starting last year, the third-party supplies industry has shown signs that money is flowing back into the space. Certain large remanufacturing enterprises including Clover and Turbon have made key U.S. acquisitions over the past 12 months. Likewise, the ownership of some of the North American industry’s leading distributors such as Densigraphix and Printer Essentials have changed hands. I have also heard that similar moves are afoot in other regions like Europe and Asia and that some offshore firms are investing to strengthen their positions in the U.S.

some well-known U.S. aftermarket firms including Cartridges Are Us, GRC, and more. The company was growing organically as well as through acquisition and had many large clients including various Big Box stores such as Staples. In 2010, Golden Gate Capital, a private equity group that owns such brands as California Pizza Kitchen, Eddie Bauer, and J. Jill, as well as many others, acquired Clover. Purchasing the West Virginiabased reman West Point Products along with Clover, Golden Gate’s acquisition was a roll-up of sorts. In 2008, West Point had purchased Multi-Laser, one of the larger Canadian remanufacturers, and was among the top 5 remanufacturers in the U.S. when Golden Gate made its move. The Clover-MSE Merger Clover has continued to grow The deal that has gotten the most through acquisition. In April 2010, the firm has acquired Redmond, attention came at the start of the WA-based Pinpoint, which mansummer when Clover Technolufactures compatible cartridges ogies, the world’s largest thirdparty supplies vendor, announced and ribbons for postage machines. In addition to its U.S. acquisijointly with the second largest remanufacturer in the U.S., Micro tions, Clover purchased Europe’s TRS Group, a remanufacturing Solutions Enterprises (MSE), their plans to merge. For Clover, concern consisting of TRS AG, mergers and acquisitions are not TRS Swiss, and Sakaar Printing Design and Engineering. Clover new. According to a Wall Street Journal article published in 2003, also bought the German remanufacturer K+U Printware GmbH Clover president Jim Cerkleski and its empties-collection subwas looking to expand by gobsidiary, Collecture. Clover has bling up smaller remans more than ten years ago. Clover’s first demonstrated an affinity for empties brokers, purchasing two of big deal came in 2005 when it acquired the North American and the largest in the U.S., Environmental Reclamation Services European divisions of Ricoh Printing Systems America (RPSA) (ERS) and Office Products Recycling Associates (OPRA), marketing third-party supplies along with Reclaim-it in the U.K. under the Dataproducts brand Clover made other acquisitions as well as others. as well including Depot America, After the Dataproducts purchase, Clover went on to acquire continued on page 34 We Saw It In ENX Magazine


ENX Magazine September 2014 Issue V2