23 Inverness Way East, Suite 160
Englewood, Colorado 80112-5713
Fax: (303) 397-7400
Web site: http://www.mail-well.com
Sales :$1.50 billion (1998)
Stock Exchanges :New York
Ticker Symbol :MWL
NAIC :322232 Envelope Manufacturing; 322233 Stationery, Tablet, & Related Product Manufacturing; 323110 Commercial Lithographic Printing; 323119 Other Commercial Printing
Within what it calls the “highly fragmented printing industry,” Mail-Well, Inc. has been a leading consolidator. From its incorporation as Mail-Well in February 1994 through early 1999, the company made more than 40 acquisitions, increasing its revenues from $260 million to $1.5 billion. Through these purchases, Mail-Well has built up significant businesses in four areas: commercial printing, in which it offers printing products and services within the general printing market; envelopes, in which it is the largest maker and printer of envelopes in North America, serving the direct mail, corporate, and retail office product markets; labels, in which it is a leading supplier of glue-on paper labels and graphic services to the food, beverage, and household products industries in North America; and printing for distributors, in which it is the top supplier of custom business documents, pressure-sensitive labels, envelopes, and commercial printing to the U.S. distributor market. Mail-Well has more than 110 printing plants in the United States, Canada, and Mexico, and has, since mid-1999, established a presence in Europe.
Rocky Mountain Roots
The roots of Mail-Well’s main predecessor company can be traced back to the 1919 founding in Denver, Colorado, of Rocky Mountain Envelope Co., which was the first consumer envelope manufacturer in that city. The cofounders were Carl L. Tucker and Willett R. Lake, transplanted Missourians, who led the company into the 1960s. During the 1920s, when Denver experienced rapid growth, the company changed its name to Rockmont Envelope Co. in order to distinguish itself from the growing number of firms that had included “Rocky Mountain” in their names. Early on, Rockmont began branding its envelopes with the trademark “Mail-Well.”
Rockmont grew steadily over the years, and by the late 1950s had a 100,000-square-foot manufacturing plant in Denver, as well as additional plants in Houston, Los Angeles, and Portland, Oregon. Rockmont also had scattered around the country seven warehouses which served the company’s customers in the entire continental United States. With a workforce exceeding 500, Rockmont made all manner of envelopes, ranging from an inch square to a yard wide by 45 inches long. The company had also made modest moves into the manufacture of low-cost stationery, which was sold in supermarkets and drugstores, and of specially designed paper bags for department stores.
In 1960 Rockmont diversified into the production of school supplies, offering a full line of typing paper, filler paper, notebooks, spiral-bound theme books, memo pads, and tablets. By this time the company was one of the largest manufacturers of envelopes in the United States. The company structure had also changed by the early 1960s, as Rockmont Envelope became a subsidiary of Pak-Well Paper Industries, Inc., a Colorado holding corporation headed by Tucker and Lake. In early 1963 Pak-Well was taken public through the sale of 153,620 shares of common stock at $11.50 per share. Pak-Well had revenues of more than $13 million in 1962, and operated plants in Denver, Portland, Houston, Phoenix, Los Angeles, Salt Lake City, and Honolulu.
By the early 1970s, sons of the cofounders had taken over management of Pak-Well, with Richard B. Tucker serving as president and Willett R. Lake, Jr., in the position of chairman. The company posted net earnings of $1.74 million on sales of $53.8 million in 1973.
The road from the early 1970s to the emergence of Mail-Well in 1994 is a rather sketchy one, but Pak-Well eventually fell into the hands of paper company Great Northern Nekoosa Corporation. Pak-Well then became part of Georgia-Pacific Corporation when that paper giant acquired Great Northern for $4.5 billion in 1990. By the early 1990s what was once the diversified Pak-Well had become strictly an envelope maker operating under the Mail-Well Envelopes and Wisco Envelopes names.
Creation of Mail-Well, Inc., 1994
The early 1990s saw many paper companies exit from the envelope business because profits in that sector had been eroded by postage increases, new technologies, and changes in the customer base. Around this same time, Gerald F. Mahoney had entered the world of entrepreneurship by purchasing a small, one-plant manufacturer of envelopes called Pavey Envelope and Tag Corp. Mahoney had previously served as CFO and in other positions at a number of companies, including a one-time Fortune 500 firm that grew very fast through acquisitions before downsizing itself through the spinning off of a number of operations. Mahoney joined with some partners with leveraged buyout experience to form the Houston-based Sterling Group Inc. After Georgia-Pacific decided to exit from envelope making, it reached a deal with Sterling to sell its envelope business for $155.1 million. Sterling also purchased—for $4.4 million— Pavey, which it merged with the Georgia-Pacific envelope business in February 1994 to create Mail-Well, with Mahoney serving as chairman and CEO.
Mail-Well was launched with 16 manufacturing plants that had produced about 13 billion envelopes during 1993. It also began with debt of $142 million and equity of only $17 million. Mahoney’s plan for Mail-Well was clear from the start: he aimed for it to be a major consolidator within a highly fragmented industry. Envelope makers typically served customers within local or regional areas. By growing through acquisition and gaining additional manufacturing and distribution operations, Mail-Well would still be able to serve regional customers but would benefit from economies of scale. Mahoney also reasoned that larger corporations with operations in different regions of the country might prefer dealing with a single envelope supplier that had plants located in each of those regions, rather than having to contract with several different suppliers.
Mahoney’s first major acquisition came in December 1994 when Mail-Well paid $97.4 million to purchase American Envelope Company, which had annual revenues of $180 million, from CC Industries. The purchase increased the number of plants to 29 and the number of employees to 4,200, and made Mail-Well the largest envelope manufacturer in the United States. Next, Mail-Well gobbled up Supremex, Inc. for $65.5 million in July 1995. Supremex was the largest envelope maker in Canada, with revenues of $90 million and 11 manufacturing facilities.
Mail-Well’s next move was to create a second leg for the company to stand on. In August 1995 it entered the field of commercial printing through the $82.6 million acquisition of Graphic Arts Center, Inc., a leading West Coast-based printer of “high-impact” documents, such as car brochures and annual reports. By this time the company’s debt load had reached $370 million, while equity had increased only to $33 million, so Mahoney in September 1995 took the company public on the NASDAQ, raising $64 million through the IPO. Mail-Well’s debt was thus reduced to $310 million, while its equity grew to $100 million. For 1995 the company posted net income of $8 million on net sales of $596.8 million.
The acquisitions in 1996 were more modest ones, but fit into the company strategy of pursuing small commercial printers and envelope printers in geographic areas not already served by Mail-Well. In April 1996 Mail-Well spent $28 million for Quality Park Products, Inc., a Pennsylvania-based printer of envelopes for the office products market, a fast-growing segment and a new area for Mail-Well. In November of that year the company increased its share of the Canadian envelope market to more than 50 percent with the $20 million acquisition of Ontario-based Pac National Group Products, Inc. And one month later, Mail-Well’s high-impact commercial printing sector was bolstered through the $20 million purchase of Indianapolis-based Shepard Poorman Communications Corporation, a specialist in calendars and computer instruction books. Net sales increased by more than 30 percent in 1996, reaching $778.5 million, while net income more than doubled to $16.9 million. In December 1996 Mail-Well’s stock moved from the NASDAQ to the New York Stock Exchange.
Our Mission at Mail-Well: maintain the highest standards of ethical conduct in all business activities; anticipate the needs of our customers by providing them with quality, value-added products, unsurpassed service, and creative marketing; encourage employees to take pride in and responsibility for ownership in their company by providing a safe, productive, and participative environment that allows individuals to grow in responsibility based on individual merit; achieve superior financial performance for our shareholders by growing while managing our costs, fostering continuous improvement, and working with our suppliers.
Added Third and Fourth Legs in 1997 and 1998
During 1997 Mail-Well spent about $87 million to acquire six more companies, including envelope maker Griffin Envelopes Inc., based in Seattle, and several firms in the commercial printing field—Seattle-based Allied Printers, Atlanta-based National Color Graphics, Inc., and Western Graphics Communications, headquartered in Cambridge, Maryland. The most significant acquisition of the year, however, was that of Murray Envelope Corporation of Hattiesburg, Mississippi. The addition of Murray provided Mail-Well with a third leg, that of printing services for the distributor market. Among the items that Murray supplied to distributors were envelopes, secure documents, pressure-sensitive labels, index tabs, and mailers. Revenues stood at $897.6 million in 1997, with net income growing to $22.2 million.
In January 1998 Paul V. Reilly was named president and chief operating officer of Mail-Well, having previously served as CFO. Also in early 1998 Mail-Well improved its equity base through a secondary stock offering that raised $90 million in capital. During 1998 the company stepped up its acquisitions activity, purchasing 23 more companies for an aggregate $369.5 million in cash, stock, and assumed debt. Three of these acquisitions were particularly significant. The addition in January of Fairhope, Alabama-based Poser Business Forms, Inc., which had annual revenues of $90 million, enhanced Mail-Well’s printing for distributors sector. In March Mail-Well gained a fourth leg through the purchase of the label division of Lawson Mardon Packaging Inc. This division, which was based in Toronto, had annual sales of $81 million and was the second largest supplier of glue-on labels in North America, with a special focus on the food and beverage markets. Mail-Well’s new label group was bolstered in May with the acquisition of the label division of International Paper, which included one of the most advanced label printing facilities in the United States. The company’s third major acquisition of 1998 also came in May when it acquired Los Angeles-based Anderson Lithograph, a $135 million in revenue firm with a reputation as one of the top commercial printers in the country. Also in May Mail-Well merged with seven commercial printing companies through the exchange of common stock worth about $118 million. The largest of these companies was St. Louis-based Color Art, Inc., which had revenues of about $75 million in 1997. In June 1998 Mail-Well’s stock split two for one. The host of acquisitions helped push revenues up to $1.5 billion for 1998, a 68 percent increase. Net income, however, fell to $21.7 million, reflecting a $21.8 million charge taken late in the year to restructure the envelope and commercial printing operations, including the closure of three facilities and resulting staff reductions.
Mail-Well was able to smoothly integrate this many companies within a short period mainly because of its hands-off, decentralized management style. Mahoney told the Denver Business Journal : “We let them pretty much run the business as they were before and over a period of time the culture evolves as they get to know how we operate.” One key imperative eventually absorbed by the acquired companies was Mail-Well’s keen attention to cost-containment, particularly through an emphasis on productivity gains.
While the acquisition pace slowed in 1999, Mail-Well made a significant move in the middle of the year when it gained a European beachhead through the $102 million acquisition of Porter Chadburn plc, a publicly traded London-based label manufacturer. Porter Chadburn had revenues of $126 million, 70 percent of which came from the United States, where ten of its 13 plants were located. But the purchase did give Mail-Well its first European operations and moved its label division into the number two position in North America. The company’s workforce grew to more than 13,000, while the number of printing prints increased to 110.
By the dawn of the new millennium, Mail-Well had quite rapidly gained top positions within four separate sectors of the $98 billion printing industry. With about 50,000 commercial printers in the United States, more than 7,600 of which had sales in excess of $3 million, Mail-Well still had plenty of opportunities for acquisitive growth. The European printing market was likewise fragmented, and the company was poised to become a key consolidator on that continent as well.
Mail-Well I Corporation; Mail-Well Canada Holdings, Inc.; Supremex Inc.; PNG Inc.; Classic Envelope Plus, Ltd (75%); Innova Envelope; Mail-Well Trade Receivables Corp.; Murray Envelope Holdings, Inc.; Murray Envelope Corp.; Barkley, Inc.; N-M Envelope Co., Inc.; Atlantis Index, Inc. (50%); Consolidated Converting Services, Inc. (20%); Graphic Arts Center, Inc.; Mail-Well West, Inc.; Wisco Envelope Corp.; Wisco II, LLC; Wisco III, LLC; Poser Business Forms, Inc.; Mail-Well Label Holdings, Inc.; Mail-Well Label Company (Canada); Mail-Well Label USA, Inc.; Mail-Well Commercial Printing, Inc.; National Graphics Co.; McLaren Morris and Todd Company (Canada); Mail-Well Mexico Holdings, Inc.; Graphic Arts Center de Mexico.
Aven, Paula, “Mail-Well Seals Acquisitions,” Denver Business Journal, February 26, 1999, pp. 20B +.
Eaton, John, “Investors Take Shine to Mail-Well,” Denver Post, April 30, 1998, p. C1.
“Growth Story,” Wall Street Corporate Reporter, January 19-25, 1998.
Haselbush, Willard, “Denver-Made Envelopes Carry America’s Mail,” Denver Post, September 15, 1957, pp. 1E, 3E.
_____, “Rockmont Envelope Moving to New Plant,” Denver Post, June 30, 1963, p. 1D.
_____, “Rockmont Only Tip of Pak-Well Iceberg,” Denver Post, March 24, 1974, p. 67.
“Mail-Well Buys Label-Making Unit,” Pulp and Paper, April 1998, pp. 19 +.
Marsh, Virginia, “Mail-Well Bids £47m for Porter Chadburn,” Financial Times, March 17, 1999, p. 22.
Mayer, Olivia, “Pushing the Envelope,” Colorado Business Magazine, March 1998, p. 40.
Narvaes, Emily, “Englewood’s Mail-Well, Under New Ownership, Is Buying Other Companies and Expanding Quickly,” Denver Post, September 7, 1996, p. D1.
“Rockmont Envelope Opens New Building,” Denver Post, November 6, 1963, p. 35.
Schwartz, Jerry, “Paper Maker Is Selling Off a Major Unit,” New York Times, December 9, 1993, p. D4.
Smith, Jerd, “Sealed Deal Creates Local Giant: At American Mail-Well, Low Profile Belies Rank As Top Envelope Maker,” Denver Business Journal, January 13, 1995, p. A1.
Svaldi, Aldo, “Buying Binges Buoy Mail-Well Stock Price,” Denver Business Journal, May 2, 1997, pp. 3A, 63A.
_____, “Mail-Well’s Proceeds Will Go to Retire Debt,” Denver Business Journal, October 13, 1995, p. A10.
—David E. Salamie