mergers & acquisitions 
The recent announcement that RR Donnelley is to pay £520 million ($1.3bn) to acquire the UK organisation Astron will raise many questions. The first may be who is Astron? The second may well be, what do they do? For me I find this acquisition very interesting. I have known Astron well almost from the time of their start up in 1996. I first met Astron through their CEO David Mitchell. I was asked, I think in 1997, to propose the motion in the annual debate held at the House of Parliament by the UK professional institution, The Institute of Printing. I needed someone to second the motion. I asked David Mitchell to do this and he accepted. Luckily the motion the two of us put forward won the day, and I met one of the UK’s most interesting and successful print entrepreneurs. Today if given the chance I would be honoured to second any motion proposed by David Mitchell.

Astron is what is known in the UK printing industry as a print management company. It employs 4,000 staff in 70 locations in the UK, Europe and Asia, and will have revenues in 2005 in excess of $700m. Print management is an area of printing where the UK leads the rest of the world in changing the way print is acquired and managed. Astron actually calls itself a document BPO organisation. For the many of us not understanding three letter acronyms, BPO stands for Business Process Outsourcing. BPO is the process where corporate organisations offload non-core areas of their businesses, which can be handled in a better way by other specialist organisations. Printing is a good example of this. Astron is not a printer, but a company that works with other printers and acts as the interface between them and the ultimate print purchaser. In years gone by this used to be called print brokering, but print management is more than this. In fact Astron is far more than just a print management company. It provides a total document management and service organisation. In fact I tend to regard Astron as more of a document support and logistics company than a print management company.

Before going further let me explain a little more about the Astron business. It started as an MBO (management buy out) of three print related companies not required in the ongoing growth of a major print group. It rapidly developed its new model of taking total responsibility for managing print projects. As an example of this is its handling of British Airways non-promotion printing shows how they work. In this Astron is more of a logistics company than a printer. Every time a British Airways aircraft takes off anywhere in the world, there is a package of printed material for it supplied by Astron. This includes relevant flight information manuals, menus for First and Club class cabins, ticketing and baggage print and so on. Astron takes full responsibility for sourcing all this print and delivering it to all locations in the world. In fact Astron manages more warehousing facilities than it runs printing facilities. In the same way if any sales person working for BUPA, the UK’s largest private health company, requires any sales literature, and they do not have it in hand, it is ordered directly from the Astron hosted web site. Astron deliver it if it is in stock, or order it and deliver it if it is not.

Astron has developed significantly both by growth and acquisition. In 2000 it acquired (some say merged with) a major competitor Tactica, the privatised print arm of the UK government, previously called HMSO. Since then it has made other acquisitions, a key one being Edotech. Edotech was a significant move into the digital and transactional printing market, being the print organisation handling the British Telecom and other organisation transactional print work. Edotech is one of the world’s largest users of Kodak Versamark printers. Astron also moved into international areas and runs call centres in Asia to provide support services for its document BPO operations.

The success of Astron shows the opportunity for print related companies to change their business approaches. It will be interesting to see how RR Donnelley takes the Astron model into its markets. Astron however is not alone in the UK in its area of business. In fact it is number two in terms of revenue, the market leader being Williams Lea. This company is also a print related company that has changed its business model. Again I have known Williams Lea for a very long time and remember them as one of the smaller London based financial printers. I sold systems and typesetting equipment to them in the 1970s and 1980s. Williams Lea now manages a wide range of services for its major corporate clients, apart from just print management, and has revenues in excess of $700m.

Astron and Williams Lea are the best examples I know of that show how printing companies can change their business models and grow substantially. They show that printers have the level of expertise to take on major corporate roles and become leaders in business process outsourcing. In this they are challenging companies like Hewlett Packard, Oce, and Xerox, and showing how their understanding of all print processes can be a major advantage. With many large corporate organisations focusing on core businesses, outsourcing is a major growth business. Printing is one of the major sources of external expenditure for corporate organisations, and many such companies are seeing the benefits of outsourcing all such operations. Companies like Hewlett Packard, Oce, and Xerox have operations to take on the digital printing areas and online access areas, but often don’t have the expertise to take on other forms of printing. In the UK specialised print management companies like Astron and Williams Lea have shown by adding additional functionality to their operations they can take on a very significant BPO role. In the USA Kinko and its owner Federal Express appears to also be moving in this direction. RR Donnelley has obviously seen this new business opportunity with their acquisition of Astron. One has to wonder which other large-scale print companies in North America, Germany or elsewhere may also be looking at this opportunity. If Astron is worth $1.3bn, I wonder what value is put on Williams Lea today?