Mergers and Acquisitions Addressed

The global print consumables industry is still buzzing about the spate of mergers and acquisitions taking pace—the most recent being LMI Solutions’ acquisition of Parts Now in the US last week.
Ian Elliott, CEO of US-based Power Commerce, addressed a packed theatre gathered on the first day at the RemaxWorld Imaging Summit on the hot issue: “Mergers and Acquisitions” (M&As).

             Picture 1: Ian Elliott
Summit panelist Giovani Giusuti (Doxsense, France) said that Remax World is not just talking “about” M&As, as serious discussions and negotiations were actually taking place on the floor of the show.

                                  Picture 2: Ed O’Connor and Giovani Giusuti

Static Control’s (SCC) Bill Swartz, Ninestar’s Jackson Wang and Apex’s Jason Wang talked with the media for the first time publicly, at their jointly branded RemaxWorld booth, since their surprising merger just months ago.
Elliott mentioned that HP has made 129 acquisitions since 1986, including 30 deals at the value of USD$70 billion while Lexmark has made 10 acquisitions since 2010 at the value of USD$680 million.
Elliott believes mergers and acquisitions (M&A) are driven by the following major goals:

• The quest for growth and cost saving
• Eliminating competition and establishing market power
• Further, Elliott gave a series data to approve that some deformations have been a key driver to stipulate M&A:
• 80-90% Gross Margins on OEM brand products (Manufactured cost compared with retail price)
• Blended OEM market share (Monochrome and Color) covers more than 80% in USA and Europe
• There is massive deformation in the market for printer consumables

According to Elliott, the Asian aftermarket manufacturers are rising, including Ninestar/Apex/SCC, Print-Rite, SGT/Cartridge World, Aster, Mito, etc. He explained, in the 1990s, aftermarket technology was transferring from Nukote to Print-Rite. After one decade, Zhuhai, China became the “world print consumables hub”. Over the past 1 year, Apex has acquired SCC while SGT has acquired Cartridge World, indicating that Chinese manufacturers are now investing in U.S. companies.
However, Elliott warned Asian manufacturers that the conventional paths to the business consumers in the U.S. have been blocked. The “Big-box” retail chains capture 80% of the market with mainly OEM product. Only one aftermarket group, the Clover Group has managed to crack the “big-box” channels. Online channels including Amazon and eBay are emerging, and thousands of regular distributors are looking for a way to get market traction.
Elliott expects M&A activities will continue.

Picture 3 & 4: Audience consistently took images of the speakers presentations