Heritage Buys Huber Printing Ink Division p.25

By: Jim Rosenberg New corporation buys diversified firm's original
business, expects further acquisitions sp.


J.M. HUBER CORP. has sold its printing ink division to Heritage Inks International Corp.
The Edison, N.J., manufacturer of newspaper and corrugated packaging inks was the family-owned corporation's first business, begun well over a century ago in Brooklyn, N.Y.
The new, Philadelphia-based owner was formed by an affiliate of Citicorp Venture Capital and Glenthorne Capital Inc., a merchant banking firm founded in 1984.
David P. Kollock, founding partner of Glenthorne, is chairman and CEO at Heritage. James Coleman, former head of the Huber division, stays on as president and chief operating officer of Heritage.
A letter of intent was signed in December, final agreement was reached in late April and the business began operating as Heritage on May 1. Huber retains no equity interest in Heritage, according to Kollock, who did not disclose the purchase price.
Kollock described Glenthorne's activities as financial advisory services in corporate development, acquisitions and joint ventures, some financial consulting and pursuit of opportunities in specialty chemicals such as adhesives, sealants, coatings and printing inks.
"We've got investments in all those projects," said Kollock. "We'll basically find a company, fix it up and go from there, usually in conjunction with financial partners."
After studying chemistry and business management at the University of Pennsylvania, including its Wharton School, Kollock spent 13 years at two specialty chemicals firms and three years in management consulting at Towers Perrin before founding Glenthorne, where he is one of three senior partners. Another, ex-banker Randy Gray, is chief financial officer at Heritage.
In the last week of April, Huber news ink manager J.R. Faris called the acquisition good for the business and its customers "because we're not being absorbed by one of the two bigger companies . . . and it gives us a chance to maybe take a step up from where we are."
Faris, who was also national accounts manager calling on group accounts, is responsible for new product development at Heritage.
"I've got some plans that I've kind of been sitting on until this thing took place," he told E&P.
Heritage intends to "aggressively expand" its operation and staff. Kollock said business growth is to be achieved internally through product and market expansion and externally through further acquisitions, which he termed "quite a bit more than a possibility."
"We definitely have some [acquisition targets] in mind now," he continued, but would only add that such measures will exploit opportunities to expand the firm's geographic reach.
Growth into foreign markets has been an approach taken in recent years by two of Heritage's three principal competitors in the North American news ink market, Flint Ink Corp. and Sun Chemical (where the domestic operation, General Printing Ink, was merged with U.S. Printing Ink two years ago).
According to Kollock, the overall challenge for Heritage are the higher quality and better service sought by customers ? demands, he noted, that are by no means unique to the printing industry.
Asked how publishers' newsprint conservation measures are affecting ink sales, Dennis Sweet, Heritage marketing and technology senior vice president, acknowledged that newspapers' page counts have been dwindling.
"However, we're also seeing an increase in the use of color advertising," he added.
"So while we might see less sales of black news inks, we are seeing an increase in sales of color news inks."
But the same continuing overseas demand that is helping to drive up those paper costs also aids Heritage. Noting that Heritage supplies inks in 40 countries worldwide, Sweet commented, "The international market is a tremendous growth market."
The printing ink industry as a whole has been consolidating for several years, but the sale of Huber's printing ink division to an independent company preserves the few remaining news ink competitors. Kollock's background may be in specialty chemicals, but he's new to news ink.
He said that in his opinion, Huber's July 1994 statement that it sought a "strategic buyer" "able to use the operations to enhance its existing businesses . . . " was a "misguided" announcement, which he chalked up to "inexperience" in the matter of "selling corporations."
Moving back to the present, the Heritage chairman said changes will be "very visible" to customers in next few months.
"We're putting our service and technical support capability closer to the marketplace. We're expanding our capability to customize inks for the news ink market."
Though Heritage will continue to supply packaging inks, Sweet called news inks "one of the critical businesses of this company" ? one in which it will invest further in years to come.
In familiarizing himself with the newspaper industry, Kollock saw significant changes for his customers since their historic industrywide slump of the early 1990s.
"Costs are going through the roof. What they're looking to do is to produce a better-quality product," he said. "What that says to us is that the service has got to get better, which we're prepared to do and we are doing."
Talks with newspaper managers, he said, led him to understand that higher-quality inks will be demanded for those "better-quality" products.
"As the market gets a little tighter for newspapers, their need . . . to improve their quality and compete with other forms of media becomes even more critical," he said.
"They rely on their suppliers to come up with the products and the programs that are going to help them compete," Kollock said.
He added that most big newspapers "have their own ideas about what kind of products they want. So there's a greater degree of specialization taking place."
Those forces, Kollock said, contribute to what he recognizes as a trend.
Other factors in the trend, said Sweet, are start-ups of new presses and new types of presses and the retrofitting of older equipment.
"Your products need to change to adapt to that," he said, especially in view of new VOC regulations and the continuing interest in rub-reduction and use of soy-oil inks.
"All of these have to be adapted to [a] particular newspaper's press configuration," and meeting the needs of a particular customer requires more effort and customization, said Sweet.
"That's the kind of work that we want to be known for," said Kollock, citing Huber's Sierra as "the first . . . low-rub news ink that had virtually no VOCs," inks that work better on recycled newsprint and formulas developed specifically for the Goss Colorliner press and on newer types of presses, including a just-released ink for keyless offset.
Huber put into practice the notions of "partnership," "total quality management" and "statistical process control" before they had become buzz words of business, training its own staff from top to bottom and going into customer sites to work on density control and other nut-and-bolts issues.
Kollock spoke much the same language, positioning Heritage as a contributor of expertise to "bring the paper to the next level," emphasizing service as much as product.
In this respect, he said, staffers have to learn as much as possible about their "customers' total process," not just the plates and the presses.
Besides in-house training and on-site experience, he said Heritage personnel train at Rochester Institute of Technology and West Virginia Institute of Technology.
?(Davic Kollock) [Photo]