The Interview: Clover, West Point Products Acquisition
- By Tricia Judge
- Jun 01, 2010
The remanufacturing industry recently received an ocean of credibility when two companies received considerable financial backing from a large investment firm. The majority ownership of industry titans Clover Technologies Group and West Point Products transferred to Golden Gate Capital this month, a private equity investment firm with approximately $8.0 billion of capital.
Both Clover Technologies Group and West Point Products’ management teams will remain in control of their respective companies, and will have ongoing resources to improve their reach into their respective market channels…and beyond. This venture, and potential future acquisitions, signal a maturation of the imaging supplies aftermarket industry that could mean more consolidation as this market continues to evolve.
According to both companies, revolutionary change will not come quickly. “Although the majority ownership will belong to Golden Gate, West Point and Clover own the rest,” said Clover Holdings CEO Jim Cerkleski. “Everybody is staying on. Tom Day is the CEO of West Point Products and I am the CEO of Clover. We will continue to operate in the separate channels as we always have but we will begin to leverage the synergies of both companies. There are no changes other than leveraging our total operations together.”
West Point Products concurred. All the principals, including Tom Day and Joe Lucot, will remain involved. Each company will remain focused in its target market, but it gives Golden Gate a tremendous stake in our industry.
“Everything will continue as it was,” said Day. “Customer relationships are the same, products will be made the same way, and we will still give our customers the support they have always received from West Point Products. This is an additional financial infusion into the industry. Clover and West Pont are sister companies in the market now, and now we can bring best practices to each other, to the benefits of our customers. ”
As sister companies in the marketplace, a few questions arise as to how they will operate going forward. West Point Products has proudly marketed its products as being produced solely in the United States and Canada. Clover Technologies Group has production facilities in Illinois, Michigan, Mexico, Portugal and Vietnam.
“The relationship with Clover does not change West Point Products’ ‘Made in the USA’ program,” Scott MacKenzie, West Point Products’ director of marketing and market analysis said. “West Point Products’ cartridges will continue to be manufactured in its existing plants. Valley Grove (W. Va.) will remain West Point Products’ main manufacturing plant, and the company’s management team will remain intact. Customers can be confident in the fact that when they order from West Point Products, they are getting the same products, with the same value proposition, as before the transactions."
The addition of Golden Gate, which owns shares of large chains like Eddie Bauer and Macaroni Grill, to name but a few, is huge. “These acquisitions advance Golden Gate’s strategy to develop an aftermarket imaging supplies portfolio,” a press release read from Golden Gate.” By starting their portfolio with the acquisition of two industry leaders, it paves the way for Golden Gate to develop a comprehensive, multi-channel platform positioned for rapid growth.”
The acquisition of these two prominent remanufacturers is an impressive “start.” West Point Products is a leading provider in the mid-market dealer channel, and Clover Technologies Group, the largest remanufacturer in the world, has distribution in every other channel, including catalog, office supplies, retail and wholesale/distribution.
“As we move forward, the goal will be to identify best practices in the way each company operates and goes to market,” said Mike Posch, Clover’s vice president of marketing and product management. “Both Clover and West Point have been very successful in their respective target markets, but the added strength of our partnership will give us tremendous opportunities for product line expansion, enhanced distribution capabilities, empty core collections and environmental solutions, as well as other areas that could improve our effectiveness and add increased value to our customers.”
The industry’s reaction to the news has been largely positive. The influx of capital and credibility demonstrates that the industry is being taken very seriously as a good opportunity for investment. And if Golden Gate is just starting its investment in the channel, it will be interesting to see what its next move will be.
It’s obviously good news for West Point Products and Clover Technologies Group. The private equity firms who previously invested in Clover and West Point Products had relatively short-term investment goals with set expirations dates in their funds. Golden Gate is an investment firm with perpetual endowments and long-tem investors. The remanufacturing industry is given credibility by such investments, and this allows for more growth within the industry. “Golden Gate brings substantial capital and a strong financial backing to our companies,” Cerkleski said. “By combining two industry leaders , Golden Gate has created a very strong and stable company capable of competing globally in the imaging aftermarket. It is important to emphasize that Golden Gate is a perpetual fund, and the firm has invested in Clover and West Point Products for the long haul.”
The two large companies, who were previously competitors, now find themselves working together. “To our customers, and to the market in general, there will appear to be very little change,” Day said. “The majority of the change will occur internally between our organizations as we strive to leverage each other’s strengths in an attempt to enhance our overall capabilities in an effort bring more value to our customers. There is excellent fit between the two companies in terms of corporate culture and business philosophies, and the exchange of ideas between the two will make us a stronger organization.”
The metamorphosis that results will lead Clover Technologies Group and West Point Products into new territory, and hopefully will elevate the industry into new customer credibility and market share. Golden Gate has just handed the industry an opportunity to bridge over into once OEM-only territory.
This article originally appeared in the June 1, 2010 issue of Recharger.
About the Author
Tricia Judge is the executive director of the International Imaging Technology Council, a not-for-profit trade association serving imaging supplies remanufacturers and dealers. Judge was also the executive editor of Recharger Magazine for five years. Judge managed a private law practice that specialized in small business issues for 11 years. Judge’s work has been published in various industry publications, and she has won critical acclaim for her writing and industry advocacy. She is a regular speaker on industry issues at meetings around the world.