ACCO Brands solves one of the more common workplace indignities: taking a co-worker's stapler. The company makes and markets a slew of traditional brand name office and computer-related products, including Swingline staplers, Kensington keyboards, Wilson Jones binders and ledger paper, and Day-Timer personal organizers, and more. It also offers private-label supplies. ACCO sells mostly to businesses through retail superstores, mass merchandisers, commercial stationers, wholesalers, mail order and internet catalogs, and club stores and dealers. Its top customers, Staples and Office Depot, generate almost 25% of all sales. In 2012, ACCO merged with the Consumer & Office Products business spun off by MeadWestvaco.
The deal was valued at $860 million, out of which shareholders of MeadWestvaco (MWV) acquired 50.5% of the merged company. Strategically important, the combination of ACCO and MWV's Consumer & Office Products (Mead COP) created a global Goliath in the manufacture and marketing of school and office products. ACCO added to its portfolio several major name brands, including Mead, Five Star, At-A-Glace, and Trapper Keeper, significant to its more demanding end-customers. Geographically, the deal expanded ACCO's share of the US and Canadian market (which represent approximately 60% of its sales), and extended its reach into Brazil.
The merger was also timely as ACCO has struggled to grow. Sales plunged in 2008 and 2009 from their prior years driven by dwindling demand for office supplies amid an escalating global economic crisis that leveled white-collar employment and triggered inventory destocking by key customers. ACCO's branded products, which have traditionally priced at the higher end of the office products spectrum, lost ground to more affordable private-label and economy brands. As a result, sales flattened in 2009 through 2011. Slight improvements in the top line were due to currency exchange rates and higher pricing, along with increasing demand for computer products. (Piggybacking on the popularity of Apple's products, in early 2011 ACCO released several new smart phone and tablet accessories that generated more than 20% of the computer product business revenue.)
Despite generally lackluster sales, earnings more than quadrupled in 2011 over 2010. ACCO's profitability was fueled by income from discontinued operations, including Australia-based GBC-Fordigraph business, which was sold mid-2011 for $56.6 million to France's The Neopost Group, and its commercial print finishing business, sold in 2009 for more than $15 million to India-based Cosmo Films.
Free from businesses and product offerings that did not meet its long-term goals, ACCO anticipates it will be in a better position to pursue growth opportunities created with Mead COP. ACCO, meanwhile, has shown an increasing interest in supplying mass merchandisers (like Wal-Mart and Target) with private-label products, which can provide an economic or merchandising advantage due to either their lower price point or more comprehensive lineup.
ACCO is a veteran in assessing the strategic fit of its activities. The company was formerly a unit of Fortune Brands (now Beam Inc. and Fortune Brands Home & Security), which spun off the office products business known as ACCO World in 2005. ACCO World subsequently combined with binding and laminating equipment maker General Binding Corporation and changed its name to ACCO Brands. – less