Customer Consortium Plan Gains Traction as an Option for printChannel.com
Press release from the issuing company
September 17, 2002 -- (WhatTheyThink.com) -- According to a statement released yesterday by printChannel.com, the company continues to negotiate with multiple parties in an attempt to sell parts or all of the company. Of note, a number of their customers have started to work together on a possible offer for part or all of the company.
Last week, it was reported that printChannel.com would cease operations in its current form by November 15th. In an interview, CEO Oliver Pflug said the company intended to proceed with a proper shut down in order not to leave customers without a solution.
Sources familiar with the negotiations say that one of the the leading candidates for acquiring printChannel.com is its own customer base. Several current customers are attempting to form a consortium which would have the print suppliers own, develop and maintain the technology for their use - similar, in fact, to the way Visa supports its commercial banks and merchants. The consortium would also consider making the service available to other print suppliers.
Steven Schnoll of Schnoll Consulting and frequent contributor to WhatTheyThink.com says the idea seems obvious for printers who have completely integrated into a system like printChannel.com. “There is validity to the thinking that a group of printers could better direct the development within such a consortium. The printer could absorb the costs and have a direct say in the development of these sorts of technologies. Also, because web based workflow is so new and because so many of the players have struggled financially, printers may think they can do a better and less expensive job.”
However, Mr. Schnoll thinks a consortium could bring its own set of problems. “Certainly, there would be formidable challenges. Even though this is somewhat different, other e-groups have struggled to gain traction. Consortium members would most likely encounter the common hurdles of agreeing on the direction of the technology and prioritizing what actually gets developed. Each printing company is different and balancing the needs could be tricky.”
The majority of customers appear committed to keeping printChannel.com’s system operational. As an example of this loyalty, industry sources confirm that a group of customers has extended a verbal offer to supply the needed cash for printChannel.com to keep the service operational or to consumate a sale of the company.
Company officials declined to comment on the consortium plan. However, WhatTheyThink.com has obtained a copy of the following statement that was sent to customers yesterday.
printChannel.com has engaged a small investment banking firm on the East Coast that is active, on our and our investors' behalf, in seeking one or several acquirers for the business and/or our technology. We currently have serious expressions of interest from about 8-10 parties, two of which have made offers that we have rejected. Another entity is currently in the due diligence process, which often precedes a formal term sheet for an offer.
One of the interesting developments since Wednesday is that a number of our print partners have started to work on a possible offer for part or all of the company.
I am unable to make predictions as to the outcome of the discussions are going on. However,it is fair to say that we are encouraged by the spontaneity and intensity of interest from the marketplace. I personally would not be surprised if we were able to announce an agreement in principle with one or more suitors in the next 2-4 weeks.
Since Wednesday we have seen continued strong ordering activity on the system; from what I know, our data center has been up as usual. We have retained certain key staff to assist with a variety of issues and tasks. We are asking all UK employees to keep working during their notice period. In short, we have been doing what we said we would, i.e., try minimize the short term effect of Wednesday's announcement on you and your customers.
Even though we cannot give firm commitments, we are trying to keep customers appraised on where we are, in the spirit of giving them quality first hand information so that they can make decisions for your business.
I urge you to ignore rumors - if you can't, please feel free to call or e-mail me directly.
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