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Burton Attempts Hostile Takeover of Cenveo

Press release from the issuing company

April 11, 2005 -- (WhatTheyThink.com Exclusive) -- Robert Burton and his investment company Burton Capital Management, have launched a hostile takeover attempt of struggling Cenveo. Cenveo, known until last year as Mail-Well, is one of the largest commercial printers in the U.S. Burton and his partners have acquired nearly 10% of Cenveo's stock, according to a filing with the Securities and Exchange Commission. Burton stated in a letter to Cenveo that he would like to become the company’s Chairman and CEO. Cenveo is currently searching for a new CEO since Paul Reilly resigned in January. In the letter to Cenveo, Burton stated that “significant changes are required to put the company on the right track in order to create shareholder value. For more than nine months, our efforts to speak with your representatives have not been given due consideration. Our patience is running out." Burton said his firm has approached Cenveo on different occasions to buy the company. In July 2004, Burton offered $7 per share for Cenveo and was turned down. Early this year, he offered $100 million to be invested into the company, but was rejected. Susan O. Rheney, Chairman of Cenveo’s Board of Directors released a statement on Friday. “While we disagree with virtually all of the assertions made in your letter, we agree that the stock of Cenveo has been significantly undervalued by the market at large. The Board of Cenveo has not been “dismissive” of any proposal made to it... We will continue our concentrated efforts to hire a CEO to take the place of our departing CEO, Paul Reilly. The roles of the new CEO and Chairman will be separate as a matter of good corporate governance...” Burton recently made similar moves to increase the value of his holdings in Creo, proposing to become the CEO and removing current management to increase the stock price. Creo eventually agreed to be acquired by Kodak making Burton a small fortune. Senior WhatTheyThink.com editor Gail Nickel-Kailing profiled Burton in November 2004. Below is an excerpt from her report which provides a historical perspective of Bob Burton. Moore Corp. Ltd – 2001-2002 Arriving at Moore in December 2000, Burton took quick action to divest the company of non-core operations and focus on its label and forms business. A Canadian National Post article, dated December 20, 2001, highlighted the changes Mr. Burton instituted in his first year, including cuts of more than US$100 million in operations costs and dismissal of 2,700 employees, or more than 17% of world wide staff. Included in the downsizing were all vice-presidents. Burton also eliminated Moore’s dividend and moved company headquarters from its lavish offices in Toronto to a more basic location near Stamford CT, close to his home. By the time of the annual meeting in April 2001, reported in the Globe and Mail on April 13, 2001, the drastic changes had drawn the disapproval of shareholders, employees and pensioners and Moore hired an armed policeman to attend the meeting. The company announced it was considering selling a number of divisions, and that it was moving ahead with plans to draw $165 million from its U.S. employee pension plan, despite notice of legal action by pensioners. Those changes did pay off for both the company and for Robert Burton. Before Mr. Burton took over management of Moore, losses per share were $.75, and those dropped to a loss of $4.21 per share as the company went through the downsizing and reorganization that took place in 2001. By the end 2002, however, earnings had turned around to $.66 per share. Stock that sold for $3.06 at the end of 2000 was worth $9.10 two years later. While making the turn, shareholders saw net earnings and earnings per share drop about 170% and 120%, respectively in both 2000 and 2001. Net sales continued to drop slowly, about 5% per year, from 1999 through 2002. Financials for 2003 include both Moore Corp. and Wallace Computer Services. Mr. Burton was paid handsomely for his contributions; he received compensation totaling $13,329,266 in 2002, and $4,758,625 in 2001. His 2002 compensation included a salary of $942,564, $3,025,000 in bonuses, and separation pay, vested restricted shares and other compensation of $9,361,702. Walter Industries – April 25 to August 3, 2000 Recruited by Kohlberg Kravis Roberts (KKR) to repeat his success at World Color Press and turn around a Tampa-based conglomerate, Burton took over the reins at Walter Industries, known for its mining, home building, and finance subsidiaries. After just 14 weeks, Burton resigned as chairman, president and CEO and Walter paid him $2.4 million severance. During his brief tenure, Mr. Burton replaced many of Walter’s executives with his own management team, and laid out a plan to turn the company around with $25 million in expenses cuts, spin-offs of some subsidiaries and a elimination of 375 (5%) of the company’s employees. According to the Tampa Tribune (November 7, 2000), “Burton’s gruff management style didn’t earn him many fans at Walter Industries, and worker morale sank. [Donald R.] Boyce, the interim CEO, soothed the employees as one of his first tasks.” Although Wall Street encouraged Walter’s choice of Robert Burton with a price jump and mourned it with a drop, shares today are selling for more than 2.7 times the price at which they closed on August 3, 2000, the day Burton resigned. World Color Press – 1991-1999 Because World Color Press’ IPO took place in 1996 and the company merged with Quebecor Printing to became Quebecor World in 1999, separate financials are difficult to come by. On the Burton Management Group website, a case study documenting Robert Burton’s contribution to World Color Press can be found. The following is excerpted from that case study. Founded in 1903, World Color Press, Inc. ("World Color") was a leader in the management and distribution of print and digital information. A former Kohlberg Kravis Roberts & Co. portfolio company, World Color specialized in the production and distribution of content for customers in the commercial, magazine, catalog, direct mail, books and directory markets. In 1999, World Color had sales of approximately $2.6 billion. The management team, led by Mr. Burton, rationalized the manufacturing platform and consolidated purchasing activities that delivered substantial bottom line improvements. A strategic plan was developed and implemented to diversify the product line to transform a $600 million publications printer into a full-service print provider. The diversification was accomplished through an aggressive acquisition program that included twenty-five (25) accretive acquisitions in an eight-year period. Significant accomplishments also included an initial public offering of World Color's stock in 1996 at $19.00 per share and the sale of World Color to Quebecor Printing, Inc. in 1999, which created the world's largest and most profitable printing company. An investment in World Color's initial public offering in 1996 delivered an internal rate of return of 44% at the time of the merger with Quebecor Printing, Inc. Capital Cities/ABC Publishing Robert Burton was named president of Capital Cities/ABC Publishing at the end of 1981. The following is excerpted from an article that appeared in the March 1987 issue of Folio magazine. Although nearly 20 years have passed since this article was published and almost 25 since he took the helm at ABC, it appears that Burton’s drive to achieve his performance goals has not changed. Few of his past or present colleagues are neutral about his managerial style; they either love it or hate it. One of Burton’s first actions when he became president of ABC was to fire 14 of the unit’s 16 corporate vice presidents. During his tenure, Burton turned ABC Publishing around, making it one of ABC’s brightest spots at a time when its broadcasting business was causing headaches. In short order, Burton instituted a wide range of changes: closed R.L. White Co., a real estate publishing operation; sold off a printing company and a mill owned by Chilton; folded or sold almost a dozen unprofitable magazines; consolidated back office and other support functions; and trimmed staffing from 3,200 to about 2,000 employees.