Magazine article American Banker

Deluxe, Selling Unit, Will Continue Business Shift

Magazine article American Banker

Deluxe, Selling Unit, Will Continue Business Shift

Article excerpt

Deluxe Corp. expects the decline in its check-printing business to slow this year, but it still plans to focus on building up its small-business printing and office supply operations.

The Shoreview, Minn., company, which reported surprisingly strong earnings last week, also said it had sold a packaging operation that is not core to its business.

Analysts said Deluxe could benefit if the pending combination of two rival check printers curbed price competition in the industry, but Lee Schram, Deluxe's chief executive, brushed aside questions about the deal.

"We put a plan together that whether there's two of them or one of them is irrelevant to us," he said. "Our customers will dictate what's going to happen in the market," and Deluxe must be "prudent until we get more clarity with our two competitors."

M&F Worldwide Corp., a New York company controlled by the financier Ronald Perelman, announced plans last month to buy John H. Harland Co., a Deluxe rival. M&F already owns the No. 3 check printer, Clarke American Corp. of San Antonio.

Analysts said that the deal, if approved by antitrust regulators, could ease price competition in the check printing industry.

"Maybe the bitter battle will settle a little bit," said John Kraft, an analyst at D.A. Davidson & Co. "The vendors all would like to see the pricing pressure minimized."

But Charles Strauzer, an analyst at CJS Securities Inc. of White Plains, N.Y., said the deal for Harland is not likely to close for nine to 12 months.

In the meantime, Deluxe "has a major turnaround to focus on," Mr. Strauzer said. "The last thing they need to do is to concern themselves with a merger between competitors."

Deluxe's fourth-quarter net income rose 20.5% from a year earlier, to $47 million, though revenue fell 1.2%, to $427 million. …

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