New York private investment firm McCown De Leeuw and Co. last week created one of the largest full-service direct marketing companies in the country by re-purchasing DIMAC Marketing Corp. and buying a full stake in AmeriComm Holdings Inc. (AHI) in a deal worth more than $450 million.
McCown, which had owned direct marketing services company DIMAC, St. Louis, from November 1993 through February 1996 before selling it to Heritage Media, bought the company back from News Corp., New York. The investment firm had owned a majority interest in AHI, Atlanta, a direct mail products and services provider, and now will own the entire company.
The two platform companies will be merged into a holding company headed by chairman and CEO Martin Lewis, current director of AHI. McCown managing director David De Leeuw said the new entity would be grown through further acquisition.
“We like the two companies together,'' De Leeuw said. “That's the beginning of what we typically do with our buy-and-build model. We had made six to seven acquisitions at each company.''
McCown signed a purchase agreement for DIMAC on May 17 and AmeriComm on May 18. The firm declined to give specific prices for each company, but Paine Webber senior vice president and business services analyst Jack Clarke said he had expected DIMAC to command around $300 million.
“I was shocked to hear [DIMAC] was going back to McCown De Leeuw,'' Clarke said. “I thought it would end up going to Harte-Hanks, not a financial company. It just shows the demand for platform companies in database marketing.''
AHI had been on a buying spree of its own, purchasing three companies in the last 13 months, including Cardinal Marketing Inc., Fort Lauderdale, FL, in March. It operates 16 facilities in the United States, including AmeriComm Direct Marketing Inc., and counts Time-Warner and American Bankers Insurance as clients. DIMAC operates eight facilities with AT&T and Blue Cross as its leading clients.
McCown has grown AHI's revenues from $8 million in 1989 to more than $200 million. It had built DIMAC from an $80 million to $170 million company during its previous ownership before receiving an unsolicited offer in 1996 from Heritage Media at what DeLeeuw called “an extremely attractive price.”
“We were enticed to part with the asset,'' De Leeuw said. “When we had the privilege of looking at it again, we looked at it in combination with AmeriComm.''