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Staples Eyes Global Market With Quill Acquisition

Staples' acquisition of office supply cataloger Quill Corp. has positioned it to be a major player in the domestic and overseas direct mail of office supplies.

Quill, Lincolnshire, IL, was acquired for 30 million shares of stock, equating to a purchase price of $685 million. Quill had sales of $550 million in 1997. The 42-year old company is famous in the direct marketing industry for its involvement in a 1992 landmark Supreme Court case preventing states requiring the collection of use tax,

The addition of Quill to its direct marketing operations will help Staples, Westborough, MA, realize efficiencies in a variety of operations and help it compete overseas with other large direct marketers of office supplies, such as Viking Office Products, Los Angeles, which last year derived more than 63 percent of its $1.3 billion in revenues from overseas operations, Quill officials said.

Staples stores will not carry the Quill brand, which represents about half of Quill's catalog sales, and Quill's headquarters and operations will remain where they are. However, substantial savings in product cost, paper cost, distribution cost, and catalog production and circulation are expected to be realized, officials at both companies said.

Meanwhile, for Quill founder, president and CEO Jack Miller and his brothers, secretary Harvey L. Miller and treasurer Arnold Miller, the arrangement was an opportunity to pass the cataloger into the hands of a company that would help it grow long term.

Although Jack Miller has pledged to continue as president and CEO for several years, the three brothers were ready to think about scaling back their involvement in the company.

“Its time. I'm the youngest of the three and I'm 65,” said Harvey L. Miller.

Staples has noted that expansion into Europe, particularly the United Kingdom, is one of its first priorities, a proposition that the Millers had considered but were reluctant to do on their own, Harvey L. Miller said.

“We thought about it, but we decided who was going to spend two or three months every year in Europe?” he said.

As it turns out, Jack Miller will work on setting up and training staff to manage overseas operations, said Harvey L. Miller, who will remain for a year to 18 months as a consultant on distribution, customer service and operations, devoting about 75 percent of the time he currently works to the business. Arnold Miller will remain for about six months as a consultant in finance and banking and will scale back to approximately 25 percent of his current involvement in the company.

Staples' catalog operations, Staples Direct, posts annual revenues of $500 million. In addition, the company has a direct sales operation to large corporations through individual sales representatives that brings in another $500 million. The company's total sales were $5.2 billion in 1997. The acquisition is expected to close this summer.

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