I recently came across the article on the
web-site of fundinguniverse.com, and it was of interest to me because --- a) I
knew the CEO of Graphic Industries, b) I was friends with Carter Pope, the
CEO’s son, c) I was acquainted with one of the printing-industry authors
mentioned in the write-up (M. Richard Vinocur), d) one of the companies
acquired by the company (PressStar of Silver Spring, MD, formerly operated a
“blueprinting” division founded by one of my ex-partners (Gary Rowley), e)
several of my repro industry friends, Mark Axford included, previously worked
for one of the company’s subsidiaries (Imaging Technologies), f) I was, at one
time, a shareholder of Graphic Industries (very minor position), g) we had a
brief discussion about being acquired by the company, and, h) yes, I’m a nostalgia freak!
Many reprographers are aware of Carter Pope,
certainly one of the brightest and most personable people to ever grace our
industry. I met Carter’s father, Mark C.
Pope, III (people referred to him as MCP3) back around 1984, shortly after Mark
took Graphic Industries public. Carter
was still in college at the time I first met MCP3. One of my partners (John Scher Zeller) and I
flew down to Altanta to have lunch with MCP3 and Gene Miller (at that time,
Gene was President of Atlanta Blueprint (which later changed its name to
Imaging Technologies). A very engaging
lunch, I might add, for I was interested in “the story” of how MCP3 took
Graphic Industries public, and MCP3 was one of those wonderful people who was
willing to share his knowledge with others.
We briefly discussed over lunch the idea of merging Rowley-Scher
Reprographics into Graphic Industries, but we, instead, took Rowley-Scher
public (late 1985). I’m not exactly sure
when Carter took over the helm of Atlanta Blueprint (he did that when Gene
Miller retired), but, after he took over, he took Atlanta Blueprint to an
entirely different level. Most
reprographers are aware that, when Graphic Industries was sold to Wallace
Computer Services, Carter, himself, purchased Imaging Technologies (the former
Atlanta Blueprint operation plus additional acquisitions Carter had made); he
purchased Imaging Technologies for around $7 or $8 million, only to later sell
the “reprographics” portion of Imaging Technologies to ARC for around $45
million. Not a bad payday for Carter,
huh! (Carter is a good example of “the
apple doesn’t fall far from the tree”, referring to MCP3’s business acumen!)
By 1983, Rowley-Scher Reprographics, a
company I was formerly an owner of, had four shareholders – Gary Rowley, John
Scher Zeller, Richard Heller and myself.
Prior to purchasing a small blueprint shop in D.C. (which was called
“The Sepia Shop” before Gary changed the name to Rowley’s Blueprint Service),
Gary had “partnered” with the owner of an offset printing company in D.C., then
called Expedite Printing (the blueprint division was called Expedite
Blueprint), but, as things sometimes happen, Gary left Expedite Blueprint to
buy The Sepia Shop; in other words, he moved forward on his own. The reason I
mention this is … well, Expedite Printing later changed its name to “PressStar”
Printing and PressStar was later purchased by Graphic Industries. (Expedite Blueprint wasn’t in existence by the
time Graphic Industries purchased PressStar.)
As to M. Richard Vinocur, long a
print-industry author, I met him several times over dinners at a friend’s
vacation apartment in Bethany Beach, DE.
Not that I knew him well, but I knew him well enough to know that he was
(hopefully still is) one of the funniest people you could ever meet. My father in law was “best friends” with
several architects (they were also our
customers), and the architect who owned the apartment in Bethany Beach [Jack
Kerxton of CHK Architects and Planners (later name change to Torti Gallas &
Partners)] was a graduate of The Ohio State University and was very close
friends with M. Richard Vinocur, who also graduated from Ohio State. It was quite funny (to me at the time) that,
even though I was involved in the reprographics industry, I met a renowned
print-industry author through one of our architect customer/friends. (We also owned a place at the beach, ours was
in Ocean City, and, when my father and mother in law came to stay with us, we
would occasionally accompany them when they traveled up to Bethany to have
dinner at the Kerxton’s.)
In mid-1987, we (now I’m speaking of
Rowley-Scher Reprographics) were approached by a small investor group who
expressed an interest in taking, and later made an offer to us to take, Rowley-Scher
private. Right after that offer was
announced, MCP3 called to express his interest (Graphic Industries’ interest)
in taking over the deal. We were already
locked up, and even with an offer (reportedly of $250k) to the investors to
walk away and let Graphic Industries come in, that did not happen, the
investors had no interest in walking away from the deal (much to my chagrin,
I’d like to add.) About 4 years later,
the investors having tanked Rowley-Scher’s business, Darris McCord purchased
the assets of Rowley-Scher (then called Reprographics Technologies Inc (or,
simply put, RTI) and, a few years later, Darris handsomely cashed out when he
sold RTi to ARC. And, years later, as I
mentioned earlier, Carter sold Imaging Technologies to ARC. So, when you think this mish-mash of history “altogether”,
I always felt that it would have been “a natural” for Rowley-Scher to combine
with another large reprographics enterprise (Atlanta Blue – Imaging Technologies),
and, yes, it did eventually happen ….. because ARC eventually purchased those
businesses.
Okay, now that I’ve gotten the “reprographics
connection” out of the way, you can enjoy the Graphic Industries’ story….
Graphic Industries Inc. History
Address:
2155 Monroe Drive Northeast
Atlanta, Georgia 30324
U.S.A.
Telephone: (404) 874-3327
Fax: (404) 874-7589
Wholly Owned Subsidiary of Wallace Computer Services, Inc.
Incorporated: 1970
Employees: 3,200
Sales: $437.1 million (1997)
SICs: 2752 Commercial
Printing--Lithographic; 2754 Commercial Printing--Gravure; 2759 Commercial
Printing, Not Elsewhere Classified; 6719 Holding Companies, Not Elsewhere
Classified
Company Perspectives:
With the commitment of our valued Associates, we look forward
with enthusiasm to setting new records and building greater value for our
shareholders in the future.
Company History:
One of the ten highest-volume commercial printing
operations in the United States, Graphic
Industries was founded in Atlanta in 1970. The company has grown far beyond its
original base, to include a network of twenty-two printing and related service
businesses stretching from Texas to Connecticut. Known for an aggressive
strategy of growth through acquisition, Graphic Industries itself became the
target of an acquisition by Wallace Computer Services, Inc. in 1998. After the
merger was completed, Graphic Industries and its operations were integrated
into those of Wallace, and the company took on the Wallace name.
The Old Roots of a Young Company
Graphic Industries, Inc. was born in Atlanta in 1970, but
the roots of some of its subsidiaries are much older. Among the twenty-two
companies which make up the Graphic Industries network, one was founded
ninety-nine years before Graphic, in 1871. Four other companies in the network
were started near the end of World War
II.
As for the Atlanta roots of Graphic Industries, these lie
in Williams Printing Company, which continues to operate as a subsidiary. In
fact, its facilities near Georgia Tech--clearly visible to travelers passing
through Atlanta on the Downtown Connector created by interstates 75 and
85&mdashe more visible than those of the parent. Founded in 1922 by Jesse
R. Williams, Williams Printing began as a one-man enterprise. Williams persevered
during the difficult years of the Great Depression, gradually expanding his
printing business. By the 1940s, when Mark C. Pope III went to work for him,
Williams Printing was an Atlanta institution.
In 1955, Pope--just thirty years old at the time--became
president of Williams Printing. He would hold that position until 1970, at
which time Graphic Industries was created to bring Williams Printing together
with six smaller companies. Within a decade, the newly-formed enterprise had
grown to become the largest full-line printer
in the southeastern United States, with the most diversified line of services
in the region.
By 1984, however, Graphic Industries had begun to expand
beyond the Southeast. That year, it acquired W. E. Andrews Co., Inc., of Bedford,
Massachusetts. Over the next thirteen years, the company acquired numerous
businesses in Connecticut, Florida, Maryland, New York, North Carolina, Ohio,
Pennsylvania, South Carolina, Tennessee, Texas, and metropolitan Atlanta. It
was a period of aggressive growth, and soon Graphic Industries was one of the
largest commercial printers in the United States.
The "Urge to Merge" in the 1990s
In 1994, M. Richard Vinocur of American Printer
cited a number of trends within the commercial printing industry, the first of
which was a strategy of mergers and
acquisitions. This he traced to Graphic Industry's mid-1980s purchase of W.
E. Andrews, "the beginning of a trend line that has seen hundreds of
mergers and acquisitions during the past 10 years." Vinocur would return
to the topic in 1996, with an editorial in which he asked "What's Behind
the Urge to Merge?" He offered many reasons, including the desire to
economize, which drove mergers and acquisitions in many other industries as
well.
In an environment conducive to growth through mergers and
acquisitions, Graphic Industries grew rapidly through a series of company or
division purchases, as well as strategic alliances with large corporate
customers. In April 1993, for instance, its IPD Printing & Distributing
unit bought the Equifax Supply Service Center division from Equifax, Inc. In
December 1995, Graphic Industries bought the in-house printing operations of
lensmaker Bausch & Lomb, an
enterprise generating annual revenues of $8 million at the time of the sale.
In May of 1996, Imaging Technologies--a Graphic Industries
company headed by Pope's son, Carter D. Pope--undertook the purchase of Spire,
Inc. The latter, an Atlanta-based division of First Financial Management Corporation (FFMC), produced some $1.2 million
annually in its CD-ROM Service Bureau and Multimedia Resale Group. Graphic
Industries intended to add the Spire CD multimedia training software to a line
of multimedia products offered by Imaging Technologies. According to the April
1996 edition of the Atlanta Business Chronicle, "The acquisition is
part of Graphic's strategy to grow by expanding into broader communications and
core commercial printing."
In fiscal 1994, Graphic Industries ranked seventeenth in
sales among commercial printing enterprises--and it continued to move up. Pope
told the Atlanta Journal and Constitution in August 1995 that upcoming
acquisitions would help the company reach the $500 million mark in annual
revenues during the year that followed. Pope, who was actually the subject of a
1993 Business Week profile which singled him out as a particularly
astute judge of stocks, would miss his
prediction by about thirteen percent. Nonetheless, Graphic Industries remained
an expanding company.
Changes in 1996
The year 1996 brought with it a number of changes which,
though not necessarily strong setbacks, certainly represented challenges to be
overcome. Among these was an event that many other Atlanta
businesses--particularly lodging and food-service establishments--treated as a
bonanza: the 1996 Summer Olympics, which were held in Atlanta. Spanning
seventeen days from July 19 to August 4, the Olympic Games would bring in
millions of visitors to attend sporting events at a number of locations around
the city, and to mingle in Centennial Park at the heart of downtown. By any
estimate, the sudden increase in traffic
would bring normal daily operations to a halt. Because Graphic's business was
not something that would necessarily benefit from tourism, the company
predicted that the Olympics would actually throw a loop in its ability to
operate effectively.
Whereas other companies with offices downtown were able to
allow their employees to work at home,
using telephone lines to communicate with their supervisors and coworkers,
Graphic Industries faced a more difficult situation. Typically, before a print supervisor can give the final okay to
do a large run for a customer, the customer needs to view proofs and give final
approval. With the city facing disastrous traffic conditions, however, the employees
themselves--let alone customers--would have a hard time getting back and forth
to the printing plants, which were located right in the heart of the mayhem.
The Olympics, as it turned out, did not create the panicked
situation that Atlanta residents had feared--in part because most of the city's
residents, terrified to even attempt driving after six years of dire traffic
predictions, stayed home during the Games. Nonetheless, Graphic Industries
dealt with a number of changes and challenges over the course of the year. On
May 15, it announced plans to sell Graphic Direct, Inc. of Elmhurst, Illinois.
The company, a direct mail unit, had not been profitable for years. In
addition, the company closed one of its Atlanta printers, Stein Printing
Company.
In September, Pope's son, Mark Pope IV, resigned as
president of Graphic Industries. Forty-six years old at the time, he had served
as president since 1989, during a period of rapid and aggressive growth. With
his departure, his father would temporarily add the job of president to his
responsibilities, along with his existing roles as chairman and chief executive
officer. Two other sons, John Pope and Carter Pope, remained as presidents of
other companies within the Graphic Industries network. Predictable questions
concerning a possible rift between father and son were denied, and all parties
involved assured the public and the media that the departure had been the
younger Pope's wish, and that there were no hard feelings.
The end of the year brought with it both good and bad news
for Graphic Industries. The bad news was the fact that on November 5 its stock
had hit a fifty-two-week low of $6.25, though it rebounded by more than $1.50
before the close of the business day. Pope believed that the heavy trading could
be explained by the fact that a number of companies wanted "to clean up
their portfolios" before year's end. The good news, on the other hand, was
that of yet another acquisition--Presstar Printing of Silver Spring, Maryland,
which gave Graphic Industries access to the extremely lucrative Washington,
D.C. commercial printing market.
Continued Growth in 1997
The setbacks of 1996 were minor, and Graphic Industries
would fully rebound in 1997. By the end of that year, in fact, the company
would show such a strong balance sheet that it would become the focus of a
bidding war between two would-be purchasers.
On September 15, 1997, the Atlanta Business Chronicle
published its list of "The Market Millionaires," Atlanta's richest
denizens. Headed by media mogul Ted Turner and Coca-Cola chairman Roberto C.
Goizueta, the list included Pope and his sons. The father, Mark III, owned some
939,000 shares of Graphic Industries stock, with a value of approximately $17.8
million. His son Carter owned another chunk of the company worth $4 million,
and John R. Pope, president of Williams Printing, held nearly $1 million.
As for Mark Pope IV, he had cashed in his 99,000 shares and
given up a $298,000 annual salary when he resigned. It was soon reported that
the younger Pope had gone to work at a local competitor, Geographics, Inc.
"We literally started talking the second day after I left," Pope said
of Geographics CEO Norvin C. Hagan. The new employer, with only $24 million in
annual sales, was much smaller than Graphic Industries. But Hagan--who
professed great admiration for Pope's father's company--said "I didn't
bring him here to run a $24 million printing company." Hagan had big plans
for his company and its expansion possibilities, and had penciled in the young
Pope to help spearhead the project. Pope's father endorsed his son's desire to
grow his career along with the company, where he could help a small entity
build equity and expand--something that he could not have done at Graphic,
which was an already-established entity.
Graphic Industries continued to apply the growth principle
in its own operations. It restructured its management in April 1997,
decentralizing according to a regional plan whereby it appointed
vice-presidents over the southeast, northeast, and southwest regions of the
United States. Also in April, the company struck a deal with computer software
giant Microsoft, whereby Graphic Industries' Wetmore subsidiary
would print documents and compact discs for Microsoft Information. The
agreement made Graphic Industries one of five commercial printers in the United
States authorized to print Microsoft data and market it directly to firms with
licensed Microsoft technology. For Graphic Industries, this meant that it could
sell directly to Compaq Computer, an extremely lucrative account, instead of
having to sell to an authorized Microsoft Information dealer who acted as
go-between.
Just months later, Graphic, whose stock had formerly been
traded on NASDAQ, switched to the New York Stock Exchange, where it would gain
greater visibility. Pope projected that Graphic was soon going to be a
billion-dollar company. Among the issues standing in the company's way was the
fact that the president's seat still had not been filled. The company
leadership had considered a number of candidates--most notably John and Carter
Pope. Most of these concerns, however&mdash well as Pope's predictions for
future growth--would soon appear in an entirely different light.
Wallace Computer Systems Takeover: 1998 and Beyond
On September 29, 1997, Wallace Computer Services, Inc.
announced that it had offered to purchase Graphic Industries for $260 million
in cash, or $18.50 a share. By acquiring Graphic Industries, according to the
Wall Street Journal, executives at Wallace--a $906 million Lisle,
Illinois-based company specializing in business forms--hoped to further the
objective of making their corporation a "fully integrated supply
manager." Graphic's wide geographic and customer bases made it an
attractive property for Wallace. Following the acquisition, Graphic would
constitute thirty-eight percent of profits in a company of 8,000 employees and
$1.4 billion in assets.
Though the deal appeared to be done, it was not. Two weeks
later, in early October, Mail-Well, Inc. of Englewood, Colorado presented its
own offer of "at least $20 per share," according to a statement by
Graphic Industries. In addition to the payment, amounting to $282 million, the
Colorado firm would assume $127 million of Graphic Industries' debt--a $387
million offer. Suddenly there was a heated battle for the chance to own
Graphic, and Wallace was quick to respond. Three days after the announcement of
the Mail-Well offer, an Atlanta newspaper reported that Graphic Industries had
been sold to Wallace--for $21.75 a share, along with $104.9 million in debt.
As for the future, Pope told the Atlanta Journal and
Constitution that Wallace planned "to keep growing Graphic. That's the
reason I went with them. That and the price, which I thought was great for the
stockholders." He would remain with the company as a consultant, and it
appeared that most employees and subsidiaries would continue as well. It also
seemed likely that Graphic Industries--even if under the Wallace Computer
Systems name--would continue to do what it had done so well for more than a
decade: to grow.
Principal Subsidiaries: W.E. Andrews Co.,
Inc.; Baum Printing, Inc.; Carpenter Reserve Printing Co.; Central Press of
Miami, Inc.; Craftsman Printing Co.; Heritage Press, Inc.; Hoechstetter
Printing Co., Inc.; IDP Printing & Distributing, Inc.; Imaging Technology
Services (Atlanta Blue Print Company; Atlantic Reprographics; Executive
Courier, Inc.; 10 other companies); Mercury Printing Co., Inc.; Monroe Litho,
Inc.; Quadras, Inc.; Southern Signatures, Inc.; State Printing Co., Inc.; Stein
Educational Marketing Group; Wallace Integrated Graphics (formerly Presstar
Printing Corp.); Wetmore & Co.; Williams Printing Co.
Further Reading:
•
Chambers, Rob, "New Suitor in the Picture: Colorado
Firm Tops Current Offer for Graphic Industries," Atlanta Journal and
Constitution, October 11, 1997.
•
Coleman, Zach, "Pope Finds New Home After Graphic
Industries," Atlanta Business Chronicle, May 19, 1997.
•
Ezell, Hank, "Graphic Industries Sold to Illinois
Firm: Founder Makes Deal to Stay as Consultant," Atlanta Journal and
Constitution, October 14, 1997.
•
Gramig, Mickey H., "Graphic Industries Acquired: $260
Million Deal," Atlanta Journal and Constitution, September 30,
1997.
•
Greene, Kelly, "Industry's Summertime Blues,"
Atlanta Business Chronicle, April 19, 1996, p. 1A.
•
------, "Graphic Industries Buying Part of an FFMC
Spinoff," Atlanta Business Chronicle, May 10, 1996, p. 18A.
•
Kanell, Michael E. and Robert Luke, "Graphic
Industries, Microsoft Sign Pact," Atlanta Journal and Constitution,
April 11, 1997.
•
Lewis, Al, "Mail-Well Bids for Atlanta Print Chain,
Offering $283 Million in Unsolicited Offer for Graphic Industries,"
Rocky Mountain News, October 11, 1997.
•
------, "Mail-Well Adds $132 Million to Assets with 5
Companies, Hopes to Grow More," Rocky Mountain News, December 21,
1997.
•
Luke, Robert, "Graphic Industries Pops Up as a Leading
Market Gainer," Atlanta Journal and Constitution, August 2, 1997.
•
McNaughton, David, "Founder's Son Leaving Graphic
Industries," Atlanta Journal and Constitution, September 14, 1996.
•
Miller, James P., "Wallace Computer Agrees to Acquire
Graphic Industries," Wall Street Journal, September 29, 1997, p.
9K.
•
Mitchell, Cynthia, "Printing: Acquisitions Put Stamp
of Approval on Metro Properties," Atlanta Journal and Constitution,
December 8, 1997.
•
Murphy, H. Lee, "Wallace Diversifies with Printing
Buy," Crain's Chicago Business, November 17, 1997, p. 26.
•
Smith, William, "When Familiarity Breeds Impressive
Returns," Business Week, May 31, 1993, p. 68.
•
Vinocur, M. Richard, "Spotting a Trend,"
American Printer, May 1, 1994.
•
------, "What's Behind the Urge to Merge?,"
American Printer, November 1, 1996.
•
"Wallace Computer Acquiring Graphic Industries,"
Reuters Business Report, September 29, 1997.
Source: International Directory of Company
Histories, Vol. 25. St. James Press, 1999.
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