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Printing Consolidation Defies Patterns


It might appear that consolidation is occurring in the financial printing world for the same reasons it is in the money management arena. But while consolidation in the money management and mutual fund industry has mainly been done to combine distribution strengths, that is not the case in the financial printing world.

In March, two of the largest financial printers made key acquisitions. Merrill Corp. of St. Paul, Minn., bought Daniels Printing of Boston, and Donnelley Financial of Sandston, Va., bought Cadmus Financial Communications of Charlotte, N.C.

An array of forces is driving acquisitions in the financial printing industry, according to Dorothy John, a consultant on shareholder communications in New York. John says there is no reliable pattern to consolidation in the sector and consolidations are not as easy to predict as in the money management world.

"It's a totally different business," John said.

While it is widely agreed that three firms - Merrill, Donnelley and Bowne - are the largest in the industry, regional players also influence the mutual fund industry which spends between $7 billion and $9 billion on printing annually, John said.

Merrill bought Daniels to improve its position in the Northeast and to acquire a printing facility there, John said. Daniels, on the other hand, which was family-owned for 118 years, was probably looking to expand but did not have the resources and so was seeking a partner, she said.

However, the Donnelley-Cadmus situation was strikingly different, she said. Donnelley was probably trying to eliminate competition when it bought Cadmus, which was looking for a partner with name recognition.

Mark Rossi, president of investment company service for Merrill, said that his company bought Daniels to get a stronger foothold in the mutual fund industry which has a strong base in Boston.

"They (Daniels) are kind of the hometown favorites," Rossi said. Last year, Merrill had about $100 million in mutual fund-related printing sales while Daniels had about $38 million in mutual fund-related sales. Merrill had over $500 million in total net sales last year.

Consolidation in the financial printing industry has a lot to do with economies of scale and competition on a global scale, Rossi said.

"There's certainly a trend in consolidation in everything... bigger is better," he said. "The regional (printers) are finding it hard to compete in a global market."