Postal Instant Press, the nation's largest franchiser of quick printing and copying centers, said Wednesday that it had received a $77.7-million buyout offer from a group led by a New York food processing company.
Kane-Miller Corp., headquartered in Tarrytown, N.Y., and some of its executives offered $18.50 in cash for each share of the Los Angeles-based company.
The market, however, was quick put a higher value on the company, indicating expectations of a higher offer. PIP stock rose $3.625 to close Wednesday at $19.125 a share on the American Stock Exchange.
"It looked like a good takeover target," said Tom Crouser, a graphic arts consultant who follows the instant printing business. "Their net income is something like 20% of gross sales--it's sitting there like a cash cow."
An industry pioneer, PIP was founded in 1967 by Los Angeles commercial printer William Levine, who saw the need for a quick printing service to produce the many small jobs his company turned down.
The first PIP shop opened in the front office of Levine's printing plant and has since grown to 1,100 shops (mostly franchised)--decorated in red, white and blue--in the United States, Canada, Britain and Japan.
The Kane-Miller group, which already owns 12% of PIP, said it plans to keep PIP's current management. "We would like to have a friendly transaction," said Arnold Bloom, vice president and general counsel at Kane-Miller. "We believe we can help guide it to better profits and to better meet its potential," he said.
PIP Board to Meet
Kane-Miller is involved primarily in processing and distributing beef, pork and cheese products and has about $500 million a year in sales, company officials said.
In response to the Kane-Miller offer, PIP will convene a meeting of its directors to consider the proposal within two weeks, the company said in a statement. Under an anti-takeover measure approved by PIP stockholders last October, any merger offer made by a holder of 10% or more of the firm's stock must be approved by 80% of the shareholders.
PIP helped spawn the fast-growing instant printing industry, which includes about 25,000 shops and about $6 billion in sales, according to Quick Printing, an industry trade magazine. Industry sales have been growing by 15% to 20% annually.
Crouser says that PIP has been able to hold on to its leadership position by maintaining good relations with its franchisees and through aggressive marketing, including the industry's only nationwide advertising campaign. A previous campaign featured actors Steve Allen and Jayne Meadows, who told consumers to "Pip it."
Kane-Miller said its offer is contingent on arranging necessary financing.
Anthony Rubin, general counsel for PIP, said the company was hiring an investment banker to advise it on Kane-Miller's proposal, which was received Tuesday.
"The offer was a surprise," he said.
For the fiscal year ended June 30, 1986, PIP posted revenue--primarily from royalties received from franchisees--of $17.8 million, up 10.9% from the year before. Net income for 1986 rose 9.8% to $4.9 million.