Size doesn’t always matter

Outflanked by a commercial printing rival for a $1.4 billion acquisition in January, a number of smaller buys by Cenveo Inc. has it on pace for better than $1 billion in deals this year.

Entering 2007 with 6,600 employees, the Stamford commercial print company has taken on roughly 5,000 workers as a result of four acquisitions, nearly two-thirds of them employees of the Richmond, Va., printer Cadmus Communications Corp., which specializes in producing scientific, technical and medical journals.

Last fall, Cenveo attempted to buy Banta Corp., among the 10 largest printers in the nation, in a bid deemed hostile by the Wisconsin company”™s board of directors. Banta subsequently sold out to Chicago-based R.R. Donnelley & Sons Inc., the largest commercial printer in the U.S.

As R.R. Donnelley has integrated Banta into the fold, including initiating job cuts, Cenveo has quietly outspent its larger rival for new additions.

Since the start of the year, Cenveo has increased its assets 60 percent to $1.6 billion, with much of the gain coming in the form of the brand reputation of companies it has acquired and other intangible assets. That is double the asset appreciation rate of R.R. Donnelley, though the companies had identical revenue increases of about 23 percent in the first half.

In the second quarter, Cenveo eked out a $3 million profit on $497 million in revenue, after running up a $33 million loss a year ago.

In an Aug. 9 conference call with analysts, Cenveo”™s chief executive officer said the company”™s results were particularly notable given postal rate increases midway through the second quarter that impacted corporate mailings. CEO Robert Burton added the company is benefiting from a recent “one-stop” purchase platform that integrates its various acquisitions.

Burton hinted additional acquisitions are in the offing even as it works to complete its July deal for Commercial Envelope Manufacturing Co.

Cenveo is spending $230 million for the Deer Park, N.Y., printer whose presses spit out 45 million envelopes daily on average. The company adds $160 million in revenue to Cenveo”™s top line.

Cenveo bought out Madison/Graham ColorGraphics Inc. for $105 million, with the Los Angeles printer padding Cenveo”™s annual sales by roughly that amount.

The March Cadmus deal was valued at $460 million, including assumed debt, and in February Cenveo spent $78 million for Printegra, which specializes in short-run print jobs.

Like R.R. Donnelley, Cenveo has followed a model of shuttering plants to consolidate operations following purchases. At least one of those moves may benefit a community long term, however.

After the company closed Imperial Lithographics in Phoenix at a cost of 165 jobs, developers there are now converting the property into upscale offices and condominiums.