Commentary to follow from Cary Sherburne

Cohoes, NY – Mohawk Fine Papers Inc. announced today that it has signed a non-binding letter of intent to buy the business of Bravo Solutions, Inc. of Elmira, New York.

Bravo is a leading supplier of specialty synthetic and paper substrates for digital printing. The acquisition will include all brands and certain assets, including manufacturing capacity for converted products, which will remain in Elmira.

Bravo substrates are designed and engineered for both toner and wet-ink printing systems. Mohawk plans to fully integrate the Bravo portfolio, including pressure sensitive, synthetic substrates, integrated products, embedded card sheets and magnetic materials, into the existing Mohawk digital product offering creating the most extensive portfolio of digital substrates in the world.

According to Thomas D. O'Connor, Jr., Mohawk's chairman and CEO, "An acquisition of Bravo will be a strategic opportunity for Mohawk and its customers. We are committed to expanding our offerings to the growing digital print market. These premium substrates represent high value, high volume opportunities for printers, merchants and their customers."

Following the acquisition, Ray Mahar, founder of Bravo, will join Mohawk as Director of Sales, Digital Specialty Substrates. In this new position, Ray will be responsible for business development and sales for both the current Bravo line and an expanded portfolio being developed by Mohawk.

"I would be extremely pleased to join the Mohawk team," said Mahar. "This venture will provide an expanded distribution network for Bravo products, as well as a platform to bring new application-specific products to digital printers that will enable them to leverage their investment in technology and grow their businesses."

The companies are working together to agree on definitive purchase documentation as quickly as possible so as to smoothly transition sales of all products to Mohawk by early third quarter.

Commentary provided by Cary Sherburne

This announcement is another in a string of interesting announcements by Mohawk as the fourth-generation family-owned company continues to reinvent itself. WhatTheyThink spoke with Chairman & CEO Thomas (Tom) D. O'Connor, Jr. to gain insight into Mohawk's reinvention strategy and how this latest acquisition fits into the model.

Our readers may recall that Mohawk has made a number of moves to expand its presence in the digital, design and photo spaces, including the development of technology solutions that complement Mohawk Maestro, a software solution designed for professional photographers and labs. The company also established Pinhole Press, a consumer-facing photo brand; and Felt & Wire shop, an online marketplace for social stationery, posters and prints.

As the press release indicates, Bravo Solutions is a supplier of specialty synthetic and paper substrates for digital printing, but which are also suitable for offset printing. Its portfolio includes such things as pressure sensitive, embedded card sheets and magnetic materials. We asked O'Connor whether Mohawk as a manufacturer would begin manufacturing all or some of these substrates or plan to continue to source them from third parties.  He said, "The synthetic portion of the portfolio will still be acquired from third parties, but we will migrate the paper-based products to our own manufacturing.  The timing of this acquisition is good, because in the third quarter we are going to launch a full line of specialty media substrates, from things like synthetics to embedded products like magnets, prescored greeting cards, door hangers-a whole array of products for the digital printing market.  This acquisition gives us a three- to four-month jump start in getting products to the marketplace."

Mohawk will also be taking over the Bravo coating and converting facility in Elmira NY. O'Connor indicates that although the plant is located about 2.5 hours away from the mill, its trucks pass within 8 miles of the facility twice a day going back and forth between the mill and its Saybrook OH and Albany NY distribution centers. "This means that freight is really a non-issue for transporting these items for distribution. It is a nice plant with good workers, and it made a lot of sense to acquire the plant."

O'Connor also commented on the overall reinvention strategy for Mohawk, the drivers behind it, and the types of innovation we could expect to see from Mohawk moving forward.  He said, "Our core business still pays a lot of the bills.  We believe strongly that while paper usage is shrinking to a degree, our types of paper are going to be around for the long haul.  People are printing less, but when they print, it means something and they want better papers.  The specialty media market that Bravo plays in is a splintered market with dozens of suppliers that provide a couple products each.  With the product portfolio we hope to have in place by the end of the year, it would take 8-10 suppliers to match us.  We are bringing some unity to that market so that our customers can get all these products from one place.  Also, depending on who you listen to, digital printing now represents 8-10% of the market with higher margins and lower barriers of entry than printing offered in the past. But it takes more than just a press to be successful.  One thing we acquired with Bravo is a full XMPie license, and we will be offering that as a hosted service to help these printers with more consultative services get into the variable data market. We can manage the variable data and send the print stream right down to their presses.  Basically we are trying to capture a greater share of this market.  In a perfect world, we would go into a medium-sized digital printer, and he might have a Maestro storefront, be using our XMPie services, and printing everything on our paper.  We will be far more than a paper supplier.  Just being a source of paper, even specialty substrates, won't have a long future."

O'Connor also talked about the success of Pinhole Press, its B2B storefront solution. In a variation of that portal system, Mohawk will be offering specialty solutions to photographers. He says, "Today, photographers at a wedding, for example, are providing a disk to their clients.  We will allow them to include a special code on that disk so that family or friends can go online, select photos and photo products, and order them through our network of printers who are using our paper. The photographer will automatically get 25% of sales from that code without doing anything.  Eventually, the entire offering will move online with specialty storefronts, and the photographer will get as larger share at that point. At a recent wedding photographers'  convention in Las Vegas, we signed up more than 2,000 photographers for this program, called Shoot, Burn and Earn." Pinhole Press has also launched in the UK and its merchant there will be offering these services to more than 8,000 photographers.  Mohawk has plans to expand services to include Ireland, Australia, India and South America as well.

Looking toward Graph Expo, O'Connor hinted there would be more announcements to come.