December 19, 2017

ModusLink acquires direct mail marketing firm IWCO Direct for $476 million

Firm sells majority stake in itself to raise funds for deal.

By DC Velocity Staff

Supply chain management provider ModusLink Global Solutions Inc. said Monday it has sold a majority stake in itself and acquired the direct marketing firm IWCO Direct for $476 million.

The move adds more digital capabilities to the firm's physical supply chain solutions services, ModusLink said. To fund the transaction, Waltham, Mass.-based ModusLink said it borrowed $418 million from Cerberus Business Finance LLC and sold $35 million in company stock to Steel Partners Holdings LP, a holding company that now owns a 52 percent ownership share of ModusLink. Steel Partners owns and operates businesses in the supply chain management and logistics sector as well as other firms in energy, defense, and banking.

IWCO Direct says it is the largest direct mail production provider in North America, providing digital print technology and direct marketing agency services, including strategy, creative services, and production for multichannel marketing campaigns. The firm also offers business continuity and disaster recovery services, IWCO said.

ModusLink said it plans to aggressively grow IWCO organically and through acquisitions. "We essentially double the size of our company and add significant earnings and free cash flow," ModusLink Executive Chairman Warren Lichtenstein said in a statement.

For the last 12 months through October 2017, IWCO Direct had net revenue of $470.6 million and net income of $18.9 million, while ModusLink had net revenue of $417.8 million and a net loss of $22.5 million for the same period, the companies said.

ModusLink's digital and physical supply chain business, ModusLink Corp., will continue to be run by CEO Jim Henderson, while IWCO Direct will continue to be run by Jim Andersen, its CEO since 1999, the firms said.

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