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Standard Register Acquires WorkflowOne (Commentary by Cary Sherburne)

Friday, August 02, 2013

Press release from the issuing company

Note:  See exclusive commentary and interview from Cary Sherburne below

DAYTON, Ohio - Standard Register announced today that it has acquired WorkflowOne in a transaction valued at $218 million, financed by assuming $210 million of long-term debt and the issuance of warrants with an estimated value of $8 million. The transaction advances Standard Register’s revenue position, enhances its product and solutions portfolio, broadens its customer base, improves its cost structure and provides greater financial flexibility and stability. 

Standard Register expects to achieve $1 billion in annual revenue and $40 million in annual savings when the integration of the two companies is complete. The acquisition is expected to deliver value creation benefits immediately from combined sales and operating capabilities and to improve 2013 EBITDA (a non-GAAP measure of earnings before interest, taxes, depreciation and amortization). The Company will go to market under the Standard Register corporate umbrella and will rapidly integrate its operations. WorkflowOne will initially operate as a subsidiary of Standard Register. Joseph P. Morgan, Jr., president and chief executive officer of Standard Register, will lead the combined company. Timothy A. Tatman, former president and chief executive officer of WorkflowOne, will serve in an advisory capacity through the integration.  

Both companies are headquartered in Dayton, Ohio, with software development, traditional and digital printing and distribution facilities throughout the U.S. and in Canada and Mexico. Standard Register serves many of the largest healthcare and commercial organizations with a portfolio of technology-enabled multi-channel communication and marketing solutions supported by a nationwide printing, kitting and distribution network. WorkflowOne provides printing, document management, distribution and marketing services to a large customer base. The combined company has 4,000 employees, including 920 in Dayton.

“This strategic combination brings together two companies with highly complementary business and market presence to create a leading player in workflow, communications and analytics,” said Morgan. “The acquisition of WorkflowOne increases our customer base and incremental growth opportunities. It also provides new markets and capabilities in retail and promotional products and cross-selling opportunities. And, importantly, we are acquiring a significant pool of talented people with expertise in our industry and markets.” 

“Standard Register has a defined, demand-based strategy that embraces the changes taking place within the printing industry. By embracing the changes, we have been able to identify new technology-enabled solutions that are growing in the marketplace and build a strategic roadmap of investments that will position us for continued success. Standard Register and WorkflowOne have a combined heritage in printing, document management and communications that is enhanced through this acquisition. We have identified many synergies in this part of the business, including simplifying processes, leveraging engineering expertise, optimizing the supply chain and improving overall capacity utilization. The cash flow from this large manufacturing network will be a source for fueling future growth,” Morgan continued. “We have a keen understanding of the trends taking place in our combined key market segments of healthcare, financial services, manufacturing and retail, and are continuing to develop innovative solutions in marketing communications, customer communications, product marketing and labeling, patient identification and safety and patient information.”

“We have engaged AlixPartners to help us with integration planning and synergy alignment. They provided valuable counsel for our strategic restructuring and have a deep understanding of our company and markets,” Morgan said.

In addition to creating one of the largest printing and print management companies in North America, the combination:

  • Increases customer diversification and penetration in our strategic markets with more than 12,000 customers
  • Serves most of the nation’s largest bank holding companies and financial services companies 
  • Creates a $300 million healthcare patient-centric communications business 
  • Establishes Standard Register among the top 10 label manufacturers in North America, and 
  • Adds a top 15 promotional products business

“By joining forces with Standard Register, we will be able to provide our customers with deeper capabilities across a broader range of products and services than ever before,” said Tatman. “I am very excited about the future of our combined companies.”

BofA Merrill Lynch served as financial advisor to Standard Register and Perella Weinberg Partners advised WorkflowOne. 

Renewal and Expansion of Credit Facility

In conjunction with the transaction, Standard Register announced it has completed an early renewal and an expansion of its credit facility. The Company entered into a five-year $125 million senior-secured asset-based credit facility that provides additional liquidity and the ability to capitalize on opportunities to grow the company. The new facility amends and extends the existing credit facility, which was due to mature on March 31, 2014. The facility is secured by the Company’s existing and future working capital assets. Proceeds will be used for financing working capital, expanding investment and for general corporate purposes of the newly combined company. Bank of America, N.A. is the Lead Arranger for the credit facility.  

Exclusive commentary and interview by Cary Sherburne

Yesterday’s announcement by Standard Register of the acquisition of Workflow One was quite interesting.  I have done work with both companies over the years, and can see some very interesting synergies.  I had the opportunity to speak with Standard Register’s CEO, Joe Morgan, to gain additional insight into this transaction and what it means for both companies beyond what is explained in the company’s very thorough press release. 

Morgan told me, “During my tenure as CEO, I have been asked several times about combining the two companies. The logic is certainly there.  They are two companies with a similar heritage, at least on the traditional side, both located in Dayton.  Our companies have hit different inflection points in their respective businesses and been affected by the trade winds of the industry and have chosen different paths.  But I have always been impressed by their brand and their ability to move forward as a company during challenging times, including bankruptcy. It shows that they have good people who are doing the right things.”

He also pointed out that the companies have similar cultures and a similar customer approach, adding, “I am also very interested in understanding how we can combine our SmartWorks technology with their customer-facing e-commerce system, which has elements that serve the retail segment. This will allow us to look at the technologies as a portfolio rather than as point products.”

Looking at Standard Register’s business model, the company has not been focused on serving retail, per se, but does have significant strengths with its distributed footprint in serving organizations comprised of large distributed networks, such as sales people or franchises, making a more focused move into retail logical.

Morgan also expects the acquisition to strengthen its healthcare business, broadening its definition beyond acute care to include such things as medical diagnostics and testing. In addition, Standard Register has made significant investments in its industrial business including digital label production and in-mold labeling. “This gives us a new set of customers for both businesses,” he says.

Although he wouldn’t commit to specifics, Morgan says this acquisition has been in the works for some time. “Many of the things we have done recently have been done knowing that this deal was likely to happen,” he explains, “and I believe those things will help with the integration of the two companies.”

One such investment was the establishment of a new digital print and distribution center in Jeffersonville, Indiana.  Morgan also indicates that Standard Register worked with Alix Partners in the first half of last year as part of its own restructuring efforts. “One thing that came from that engagement,” he says, “was a framework that will help us streamline the integration of the two companies.”  While Morgan admits that ultimately there will be some effect on employees as a result of the acquisition, it is too early to make any assumptions about what those might be.

Morgan concludes, “This has been a long journey, but we were able to come together and make this announcement.  The process has been exciting, and it has confirmed a number of things for us strategically.  We’re excited about it, and about starting the integration process tomorrow!”



By Pat Berger on Aug 03, 2013

This transaction was nothing more than a debt transfer plus a few million in warrants.
To understand all of this you need to know how the $210 million of indebtedness was incurred and the increasing inablity for the debt to be serviced.
Standard Register is the white knight saving WorkflowOne.


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