More than $25 million in cost synergies are expected annually starting next year as a result of yesterday's announcement that Deluxe Corp. will acquire business-to-business cataloger New England Business Service Inc.
“There are a lot of similarities, so we're looking to have cost synergies regarding the elimination of redundancies in the supply chain, IT, procurement and all of the support functions,” said Stu Alexander, vice president of investor relations at Deluxe, Shoreview, MN. “[We'll be] leveraging a shared services platform [including] call centers.”
Deluxe will pay $635 million for NEBS' stock, plus the assumption of $160 million of debt, according to Daniel M. Junius, executive vice president and chief financial officer at NEBS, Groton, MA.
Alexander pegged current annual revenue at $1.2 billion for Deluxe and more than $700 million for NEBS. Deluxe has 5,400 employees, while NEBS has more than 4,000.
“We've been in discussions for several months,” Junius said. “You have two companies in some comparable areas. We both work closely with financial institutions and the small-business marketplace.”
NEBS distributes more than 90 million catalogs and solo mailings annually, targeting small businesses in the United States, Canada, the United Kingdom and France. Products marketed include business forms, checks, packaging supplies, promotional materials and custom printing. Junius said NEBS has about 15 catalogs including NEBS, Rapid Forms, Main Street, Holiday Expressions, Company Colors and Chiswick.
Deluxe markets directly to consumers through freestanding inserts and has several business segments that work with financial institutions.
“Combined, NEBS and Deluxe will serve more than 6 million small businesses with very little overlap with a much broader product offering,” Alexander said. “Deluxe is marketing checks primarily. NEBS has a much broader array of product offerings. NEBS has stationery product [as well as] advertising [and] promotional products — anything that a small-business customer would use to manage, promote and grow their business.”
Alexander said integration teams will be involved in new product offerings as well as dealing with any possible relocation or closing of facilities.
“No decisions have been made with regard to that,” he said. “Staffing levels would be reduced over time as we eliminate redundancies, [but] no targeted numbers have been communicated.”