It's Golden for Clover Technologies and West Point Products5 Jun, 2010 By: Sand Sinclair imageSource
It's Golden for Clover Technologies and West Point Products
Golden Gate Capital recently announced the acquisitions of Clover Technologies Group and West Point Products. In so doing, the merger combines two leading aftermarket players in the supplies industry. Strategically, it’s a win-win for Clover Holdings who owns both Clover Technologies Group and now West Point Products, so as to form one company. But the question remains, how will this affect product brands, facilities, customers and the dealer community at large?
To gain insight on the bold move for broader opportunities through global expansion, imageSource tapped Clover Technologies President, North America Sales, Eric Martin to learn more of what’s behind, and in front of, this significant joint partnership
First, let’s briefly review company background to gain a better perspective. Clover is the global leader in providing vertically integrated, closed-loop environmental solutions, including the recycling and remanufacturing of imaging supplies focused on national accounts, retail and the wholesale/distribution channels. Along with collecting and recycling empty ink and toner cartridges, Clover also provides comprehensive recycling services for small electronics including cell phones.
In December, Clover acquired NER Data’s wholly owned subsidiary, Image1, a one-source solution distributor-manufacturer for laser printer parts, refurbished printers, and supplies. Clover has also been active outside of the United States with a recent acquisition in Australia, a new operation in New Zealand, and plans to move into Asia and South America. With the Golden Gate transaction, one organization was created with an ownership structure that rolls up into Clover Holdings. Golden Gate owns approximately 60 percent of the new organization by buying out the shares of the existing private equity partners in both companies and acquired some of the management’s stock of Clover and West Point, who owned majority shares before this event. As a result, the management teams of Clover and West Point now own approximately 40 percent of Clover Holdings.
To understand how this partnership will leverage their combined services and extend their capabilities, let alone reach, imageSource gets under the hood with Mr. Martin on their strategy:
Imagesource (IS): Eric, what was the motivation or strategy behind Golden Gate’s acquisition of Clover Technologies Group & West Point Products? What is this move aimed at tapping into? Who benefits?
Eric Martin (EM): Golden Gate’s strategy was to develop a comprehensive, multi-channel platform. The acquisition of two industry leaders provides the foundation to do that and positions the combined organization for rapid growth across different channels through diversification, organic growth and future acquisitions. Our customers will benefit due to a laser focus on their needs. Channel focus will enable each organization to do what they do best and drive a best-in-class experience from product offering and quality, to support and services.
(IS): Do you see any major consequences or opportunities with the change? Does this alter the playing field for dealers using your existing products?
(EM): As we leverage our R&D and engineering resources to drive synergies, we will be able to further strengthen our strategy of being first-to-market with the highest quality products and the availability that our customers need. Additionally, we are looking at acquisitions inside and outside our space. As an environmental solutions company we continue to look at other areas that fit our environmental philosophy—recapturing, remanufacturing, and remarketing used assets. With that strategy in mind we will continue to focus on the growth within the imaging space with supplies, parts, services and the remanufacturing of printers. We will also be diversifying into cell phones, small electronics, and other items.
(IS): Will each manufacturer continue to honor their existing agreements, continuing to sell their current line of products and/or is any expansion of product planned that providers can take advantage of?
(EM): Both companies will continue to support and promote their current product offerings. That said, with additional products and services such as printer parts and refurbished printers through Image1 and MPS (Managed Print Services) programs, we will look to provide support across all organizations to continue to diversify and offer our customers a full breadth of products and services.
(IS): Will there be any management structural changes? Or just stronger commitments from existing management?
(EM): Organizationally, both companies will continue to operate independently in their respective markets but will work together to leverage potential synergies in the future. Existing management of both organizations will remain in place and senior management of each company will remain large shareholders. Both organizations have become industry leaders with the current management teams and both senior management teams will continue to be involved in the future growth strategy of the organization.
(IS): Will either company be introducing any of the other’s product lines into their mix or stay branded distinctly focused as is?
(EM): Both companies will continue to focus on their respective markets and with their own brands. Clover and West Point have specific go-to-market strategies aimed at growing their target markets and that will continue in the future.
(IS): Do you think there will be more opportunities for independent dealers?
(EM): Absolutely. This multi-channel platform will enable each organization to have 100% focus on their core competencies and on driving a best-in-class experience. For the mid-market and independent dealers it means West Point will be completely focused and structured to support their needs in addition to being able to leverage the largest product and services offering in the industry.
(IS): What do you want the industry to know specifically?
(EM): This platform was built with one specific goal – to provide the best possible service to our customers and help them grow this category. Both Clover and West Point were built on a “customer comes first” mindset and this structure will enable both companies to maximize their efforts in each channel. Also, we will continue to look to grow this platform through the methods mentioned earlier to bring further diversification of products and services to ensure our customers a best-in-class experience. It truly is all about our customers and how we support them and their needs.
Industry Experts Have This To Say
Leading industry analyst firm InfoTrends, specifically Cathy Martin and John Shane, went on record with the positives regarding Clover’s recent news. “We believe that this combination is a sensible fit. Clover is strong with the large retailers as well as the national stationer channel while West Point is stronger in the SMB and mid-market dealer market with an expertise in MPS.” They went on to say that, “Clover also has strong inkjet production with Cartridges R Us while West Point was using another supplier so now West Point will likely leverage Cartridges R Us for inkjet. Finally, West Point has been supporting and marketing MPS to its customers while this did not really fit with most of Clover’s customers. However, we expect that national stationers will be growing more involved in MPS and this provides Clover with the opportunity to work in that environment by leveraging West Point’s expertise in that area.”