Brady Buys Signage Manufacturer for $190M

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A business-to-business marketer and manufacturer of safety identification products looks to increase its presence in the sector with an acquisition expected to close next month.


Brady Corp., Milwaukee, signed a definitive agreement April 2 to acquire EMED Co. Inc. from Summit Partners, a private equity and venture capital firm that invested in EMED Co. in 1999. The cash transaction is for $190 million.


EMED, Buffalo, NY, is a direct marketer and manufacturer of identification products such as traffic and parking signs, warehouse and shipping signage, first aid and protective wear, security and emergency preparedness products along with other custom signage and safety solutions.


Brady expects to fund the purchase from part of the proceeds of new credit facilities organized by Bank of America. The credit facilities also can be used to make future acquisitions and for general corporate purposes.


"EMED has always been a very profitable company," said Carole Herbstreit, manager, corporate communications, Brady Corp. "Acquisitions is a key strategy. We've acquired 27 companies in the last nine years. The acquisitions are focused on long-term growth.


"We took a look at EMED five or six years ago and revisited it again several months ago."


EMED had 2003 sales of $55 million. Brady generated $555 million in sales in fiscal 2003, which ended July 31, 2003.


"EMED has very complementary products, and it has strength in some markets that are very attractive to us," she said. "We both do regulatory signage and safety and facility identifications. We both manufacture those types of products. A lot of their signage will be in airports. We do a lot of new construction, including pipe markers.


"They are strong in markets such as government, transportation, traffic control and grounds identification. Brady is strong in electronics and telecommunication [as well as] construction and manufacturing. In a manufacturing facility there will be a lot of safety signage like 'helmet required' and piping signage."


Herbstreit included Seton, Champion and Signmark as among the main books produced by Brady. Brady's DM arm is Seton, based in Branford, CT. Seton provides products via catalogs and the Internet.


There are no plans for immediate consolidation, layoffs or closure of facilities or locations.


Brady has 3,500 employees worldwide. EMED has 200, virtually all in Buffalo, with a small operation in Palmetto, FL.


"We expect to run EMED as a separate standalone business," she said. "We need to go in and review some things. EMED is very profitable and successful, and we expect to let that run as it has."


As for changes in catalog marketing strategy, Herbstreit said, "We'll be looking at that. I'm sure that there will be some synergies in terms of printing. Maybe we can combine and save money on printing."


Don Libey, managing director of Libey-Concordia, Philadelphia, which provides investment banking services to the catalog industry, described the deal as a perfect acquisition for Brady.


"[It's] a brilliant acquisition," he said. "The brilliance here is that Seton takes out its most active competitor and brings the marketplace down to one supplier in the catalog world of ID labels -- targeting manufacturers, utilities and industrial labeling such as water pipe labels and equipment labels and things used to identify machinery and products."


He added that EMED "grew rapidly during the '90s, and it gives Seton a dominant position in the marketplace."


He also said a high multiple was achieved.


"If it's profitable at 20 percent, that would be a 17 times earnings multiple," he said. "Great catalog companies are bringing five to seven times earnings. The only other one that's comparable is Medical Arts Press that brought 17 times earnings. It was bought by Staples last year."


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