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Baker & Taylor Sold to Another Investment Firm
Posted On July 14, 2003
The venerable Baker & Taylor company, long known as one of the leading book distributors to libraries, has been sold. Willis Stein & Partners, a private equity firm, purchased the company from The Carlyle Group for $255 million. The Carlyle Group, an equity investment firm, had acquired Baker & Taylor from W.R. Grace & Co. in 1992 for $106 million. Baker & Taylor stated that it "enjoyed significant growth and improved operating performance during the period Carlyle owned the company." The sale is expected to close in July.

Baker & Taylor is not just limited to books or to libraries. It has a diverse range of products and markets. The company has three operating units. The company's institutional unit distributes a range of books, data, music, and DVDs to public, school, and college libraries in the U.S. and internationally. Its retail unit supplies national and independent bookstores and Internet retailers (including Amazon and Barnes & Noble) with nearly 4 million book titles and more than 135,000 video, DVD, and CD titles. Its Informata unit distributes electronic content, licenses database services, and develops information products.

Baker & Taylor was founded in 1828 as a small bindery and subscription book publisher. In 1912, the company discontinued publishing to focus on book distribution. In 1986, it expanded into music and video distribution. Baker & Taylor, headquartered in Charlotte, N.C., now has over 2,700 employees and $1.2 billion in revenue. The company says it maintains one of the largest combined in-stock book, video, and music inventories in the U.S. with approximately 600,000 titles in inventory and over 1.5 million available for order. During Carlyle's 11-year ownership, Baker & Taylor reportedly grew revenues by approximately 50 percent and operating cash flows by about 300 percent "through a combination of intrinsic growth, acquisitions, and superior execution."

Sources indicate that Carlyle had tried to sell the company earlier. A sale to Follett Corp. was reportedly called off at the last minute in 1994. Baker & Taylor tried to raise $75 million in an IPO in 1999, but by spring 2000 had cancelled it because of difficult economic conditions. Philip Dolan, managing director for Carlyle, commended the achievements of the Baker & Taylor management team. But, he indicated that it was time for another investor to work with the company on its next growth initiatives.

The new owners, Willis Stein & Partners, have made investments in more than 40 companies and currently manage approximately $3 billion of equity capital. The investment firm says it specializes in "profitable, well-managed, and growing businesses targeting the consumer products and services, media, telecommunications, business services, manufacturing, and health care industries." The company also currently owns Ziff Davis Media, Inc., and formerly owned magazine publisher Petersen Publishing and children's book distributor Troll Communications.

"We are excited about this next stage in the 175-year history of Baker & Taylor," commented Jim Ulsamer, president of Baker & Taylor's retail division. "Willis Stein made the investment in Baker & Taylor because of our excellent position in diverse markets, strong operating performance during challenging economic times, and most importantly, the opportunity to significantly grow and improve the business."

Baker & Taylor's CEO, Gary Rautenstrauch, is being replaced by Richard Willis once the acquisition is complete. Willis, who reportedly is not related to Willis Stein co-founder John Willis, was most recently the CEO of bicycle helmet maker Bell Sports, Inc. of Dallas and has over 20 years' experience in media and manufacturing companies. Rautenstrauch will stay on through the transition as a consultant.

Daniel Blumenthal, managing director of Willis Stein, commented: "With their rich history as a market leader and diversified customer base, Baker & Taylor is an exciting addition to Willis Stein & Partners' portfolio. We are thrilled to be working with Richard Willis again, building upon the success we achieved together at Petersen Publishing. We look forward to working with the talented Baker & Taylor management team and exploring ways to grow and improve the business. In particular, we appreciate the leadership Gary Rautenstrauch has provided and look forward to his continued involvement with the company."

In case you're wondering about the current market for printed books in an Internet-dominated era and depressed economy, it seems to be holding its own. According to figures released by the Association of American Publishers (AAP), U.S. book sales totaled $26.8 billion in 2002, a 5.5 percent increase over 2001. Baker & Taylor's Ulsamer said those figures appeared to be on the high side and that growth in the book market for distributors was flat or showed just a slight increase, while music sales have declined for 2 years, and video was slightly better due to DVD sales. Baker & Taylor's major competitors are Ingram Industries and Ingram Entertainment.

Paula J. Hane is a freelance writer and editor covering the library and information industries. She was formerly Information Today, Inc.’s news bureau chief and editor of NewsBreaks.

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