R.R. Donnelley Buys CTC Distribution Direct

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R.R. Donnelley Logistics Services, Downers Grove, IL, the business unit of R.R. Donnelley & Sons Company that distributes catalogs, magazines, books and direct mail, announced yesterday its acquisition of CTC Distribution Direct, Minneapolis, a mailer of business-to-home parcels.The acquisition is expected to close within the month.

Under terms of the agreement, John Clark, founder/CEO at CTC, and the CTC management team, will continue to play a leadership role in the new organization. Executive offices will remain in Downers Grove and Minneapolis; CTC will also retain its name.

The company is the nation's largest small-parcel consolidator and, since its founding in 1982, has been credited with pioneering the parcel consolidation service industry. CTC operates through a network of 18 nationwide, company-owned sorting and distribution centers. The facilities are located throughout the country and accesses thousands of local post offices and currently services more than 300 clients, including America Online, Chadwick's of Boston, Home Shopping Network, J.C. Whitney and Miles Kimball.

The acquisition of CTC -- which moves more than 40 percent of the parcel volume of the USPS -- doubles the size of Donnelley Logistics and will result in a combined enterprise that makes $800 million in gross sales. Donnelly currently moves 15 percent of the nation's commercial mail and has 300 customers.

Both companies say the new enterprise will enable catalogers, e-retailers, publishers and direct marketers to deliver their products on time and more efficiently.

Both also view the acquisition as a good fit because they share many of the same customers and offer different -- but similar -- distribution services: Donnelley picks up catalogs and direct mail pieces at customer locations and then drop-ships them to USPS' sectional center facilities and to the local post offices, in an effort to get mail delivery to the end-user faster and as affordably as possible. CTC, on the other hand, offers the same service, but for parcel deliveries, and has a delivery network of thousands of local post offices around the county.

"We put this together so we have more scale going into the local post offices," said Matt Bernstein, vice president of marketing, R.R. Donnelley Logistics Services. "The more scale you can bring, the better and more reliable and faster you can deliver to the local post office, where you then let the neighborhood mail carrier cover the last mile to the home."

Bernstein said: "Getting the product into the local post office -- creating that pipeline into the home -- is what makes this business work. The closer you get to the ultimate destination is quicker, more reliable, and more economical."

In addition, shippers can now have the convenience of using one distribution company instead of two or three. According to Donnelley, the acquisition comes at a time when the demand for business-to-home parcel delivery is increasing. According to market researcher Forrester Research Inc., Cambridge, MA, for example, recently predicted that e-retailer shipments of 240 million parcels in 1999 will increase to 1.5 billion parcels per year by 2003.

Donnelley Logistics and CTC executives said customers would immediately benefit from the combination. "We are enhancing an innovative business that will offer our customers precision delivery at attractive prices," said John Campanelli, president, R.R. Donnelley Logistics Services. "Combining our operations and technology expertise and our proven track record of on-time delivery with CTC's delivery network of thousands of local post offices is a home run."

John Clark said: "In our business … scale is critical to delivering both mail and parcels. We will move more than 40 percent of the parcel volume of the U.S. Postal Service and 15 percent of the nation's commercial mail. Our combined scale will benefit our customers by giving them predictable and more economic delivery."

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