Bell & Howell Co. has announced that it plans a major restructuring that will split the company into two new companies, one of which will retain the Bell & Howell name and stock ticker symbol (BHW on the NYSE) and consist of the Mail and Messaging Technologies and Imaging businesses. It will focus on a variety of business services and offer applications software. The other business, yet to be named, will comprise the Information Access business units, which are B&H Information and Learning (formerly UMI) and the Publishing Services business (formerly Publication Systems). This new company will also include Bell & Howell's equity stake in the K-12 Internet business venture with Infonautics, which is still unnamed. Bell & Howell expects to complete the restructuring before the end of the year.
In announcing the plans, James P. Roemer, Bell & Howell chairman, president, and CEO, said: "We're extremely excited about these very positive steps for Bell & Howell. We strongly believe that restructuring ourselves into two highly focused entities will enable our businesses to maximize their fundamental strengths through better access to capital and the ability to attract and retain talented employees." A Reuters story reported that Roemer said the company had toyed with the idea of splitting its operations for years, but wanted to solidly establish both branches first.
The New B&H
Nils Johansson, current executive vice president and CFO of B&H, will serve as chairman of the new Bell & Howell. Johansson will also be a senior strategic advisor to the Information and Learning and Publishing Services businesses. Howard S. Cohen has been appointed president and CEO of the new Bell & Howell. Cohen joins B&H with executive management experience in business services, telecommunications, and systems integration.
The Information Company Spinoff
The new company providing information access will operate as an independent, publicly traded entity through a spinoff to existing Bell & Howell shareholders. The spinoff is contingent on obtaining a favorable tax ruling from the IRS. Prior to the spinoff, Bell & Howell plans to sell a minority stake, expected to be up to 20 percent, in the Information and Learning and Publishing Services businesses to the public through an initial public offering (IPO). The company will use the proceeds of the IPO to pay down debt, to provide more flexibility, and to fund new ventures.
Roemer will serve as president and CEO of the new education and publishing company. He will continue to lead Bell & Howell in his current capacity until the spinoff is completed. He was named chairman of the board for Bell & Howell in December 1997 and has served as chief executive officer since February 1997. Roemer has been director, president, and chief operating officer of B&H since February 1995. He joined the company in 1991, and has headed up two B&H units, including UMI. In a conference call with analysts and the press, Roemer indicated that he had been willing to lead either company, but the board of B&H preferred this arrangement. Joseph Reynolds will continue to head the Information and Learning division and, according to Roemer, will be a key player in the development of the new company.
Roemer stressed that the new company would aggressively pursue more "dot-com opportunities" that are not possible with the current corporate structure. He expects it to achieve short-term growth in the area of 10 percent for 2000, which is about what it has been recently, with improvements expected long term. He said that the restructuring was clearly the best move for B&H, one that would offer better overall service for customers and create a clearer structure that would make it easier for investors to understand and value the company.
While the Information and Learning unit has focused on the education and library markets with its information products and services, the Publishing Services component of the new company serves the transportation and vehicle market. The business provides online technical reference materials and electronic parts catalogs, and it recently launched a motorcycle Web site. Roemer noted that synergies between the units are there since it is still an information company, even though it addresses a different market, and that the company would look for additional markets for its information products.
The K-12 Education Company
According to the company, these overall restructuring efforts will have no impact on the company's previously stated intention to transition its K-12 Internet business venture to a stand-alone company with its own publicly traded stock, at some point in the near future. The K-12 Internet business has recently completed a large round of private financing, in which it raised $55 million from a group of venture capitalists. As a result of the financing, Bell & Howell's equity stake in the K-12 Internet company is now slightly under 50 percent. Infonautics has just increased its equity stake in the new education company by purchasing approximately 4 percent of the new company for $3.5 million, bringing its total to about 20 percent. Roemer indicated that the new education company has chosen a name, but details about the name, the investors involved, and other information would be released within the next two weeks.
Since last May, when UMI announced the change in corporate identity and its new name, some of us in the information industry have had a difficult time making the change to "Bell & Howell Information and Learning." Even their phone system still includes the parenthetical, "formerly UMI." Roemer says the information divisions now have an internal contest to suggest a name for the new company. Let's hope for something easy to say and remember. I doubt they'd return to the UMI name, and though ProQuest is a great brand, it may not be encompassing enough for a corporate identity, especially with the inclusion of the Publishing Services business. It will be interesting to see if they jump on the dot-com bandwagon.
UMI seemed to benefit from 15 years of ownership by Bell & Howell, growing, acquiring other companies, adapting to a digital world, and launching impressive products, like the Digital Vault Initiative. But the times have changed. Companies acquire and merge, grow, and then spin off, and everything now happens faster with the Internet. Market forces demand continual reevaluation and nimble adjustment, which is sometimes not possible with large corporate structures. We hope the new information spinoff company keeps in touch with its customers and continues to offer solid information products.