Banta To Eliminate More Than 500 Jobs
Banta Corp. announced Sept. 14 a series of strategic initiatives as a follow-up to its reorganization plan of several months ago. These actions, which include laying off about 6 percent of its workforce, are designed to bring the company significant cost savings and make it a more competitive player in the print and supply-chain management industries.
These initiatives, which include a special $16 per-share cash dividend for shareholders, come shortly after a couple of bids from Cenveo Inc. to acquire Banta, Menasha, WI. In the latest, at the beginning of September, Cenveo, Stamford, CT, offered $47 per share, a 38 percent premium on Banta's closing price, prior to its first offer in early August. Cenveo has said Banta does not fully understand what is happening in the print industry today while Banta has referred to the bids as unsolicited and highly conditional.
The steps Banta will be taking include further consolidating management infrastructure beyond the first step announced in July, which reorganized Banta's print sector from five divisions into two, centralizing administrative functions and eliminating non-essential services.
In addition, the company will be closing or selling five print facilities that are either not meeting profitability expectations or whose activities can be effectively consolidated into other Banta operations. As a result of these moves, Banta intends to eliminate more than 500 jobs, or approximately 6 percent of its employees.
In order to position the business for long-term, sustained profitability, the company will also initiate significant changes in its supply-chain management business. It will add new facilities and make addition investments that are expected to result in a decline in both revenue and margins in 2007. However, both revenue and margins are expected to rise significantly in 2008 and beyond as these business model enhancements take hold.
Banta has reached an exclusive agreement in principle to acquire a book and commercial printing company in Southern China. The deal is expected to close by year-end. The company also expects to open a facility for its supply-chain management business in Shenzhen, China, during the fourth quarter of 2006 and is planning to add several additional supply-chain management facilities during 2007 to better align its service delivery platform with customer demand. These new facilities are expected to expand Banta's ability to provide end-to-end global supply-chain solutions, while at the same time lowering it global cost profile.
Banta also announced that is has executed a letter of intent with its largest customer, HP, for a new five-year relationship.
The steps announced yesterday are expected to generate annualized cost savings of $35 million when fully implemented and position Banta for global expansion in both its print and supply-chain management businesses.