RR Donnelley Buys Consolidated – Survival or Growth?


Early in my career I fantasized about the possibility that 100% of the businesses in the world, their economic output and profits were all the efforts of one person. Seems a bit farfetched but I always deemed it plausible.

Some of the United States most influential industrialists like Andrew Carnegie and Rockefeller had that dream, although those dreams were eventually dashed by anti-monopoly laws.

The Monopoly of Print?

When I heard of the acquisition of Consolidated Graphics by RR Donnelley I certainly was not surprised. Donnelley with a $3.26 billion dollar market cap acquiring a smaller entity with a $617 million dollar market cap. Each company has very respectable “revenue per employee” numbers in a very competitive market with $182,188 and  $197,919, Consolidated having the edge.

A quick look at their websites reveals complementary technologies and product offerings.  Both companies have lots of locations with Donnelley being more “global” with about 40 overseas locations.  A great fit.

Survival or Growth?

So what is RR Donnelley buying? Customers, technology, unique products, people resources or a corporate culture? Maybe all of the above. I am sure there are many that are simply saying it is part of the natural evolution happening in the industry of consolidation due to a shrinking market.  From the outside it certainly looks like this might be the case.

Appears to be the old “survival growth strategy” when a larger company in a declining market buys up smaller companies. Larger company experiences incremental growth and the industry goes on to fight another day. (Remember microfiche and the Anacomp buying spree?)

Not playing monopoly … Just smart business

My guess, is that RR Donnelley is not playing monopoly with the acquisition but is catapulting their evolution as “distributors” of information. It is about content and the delivery of that content utilizing a variety of channels that are instigated by print.

If you look at their websites there certainly is overlap but there are also plenty of differences which represent opportunity and growth. These two forward thinking companies are simply engaging in smart business and are well positioned for the future.  (Kind of like owning both Boardwalk and Park Place)

Survival, growth, monopoly or smart business. What are your thoughts?

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1 reply
  1. Paul Abdool
    Paul Abdool says:

    Great blog Skip. I love owning Boardwalk and Park Place and the preceding properties as well.

    I think the difference here is that they will be charging lower rent with economies of scale and as a consumer you won’t be forced to go clockwise around the board.

    Also keep in mind that people also want to play Twister, basketball or a video game as well. My weak analogy of multi-channel communications.

    Reply

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