When M&F Worldwide Corp. acquired Clarke American Corp. in December 2005, the New York holding company linked two very unlikely affiliates.
Clarke was the No. 3 check printer and operated call centers for banking companies; M&F's other longstanding division, Mafco Worldwide Corp., the world's largest provider of licorice for candy and tobacco companies.
The deal gave M&F a small presence in the financial services industry, but that role is almost certain to grow after the New York holding company announced Wednesday that it plans to buy the No. 2 check printer, John H. Harland Co., in a $1.7 billion deal.
M&F's largest individual shareholder, with 38% of the shares outstanding, is MacAndrews & Forbes Holdings, another holding company controlled by Ronald Perelman.
Mr. Perelman is no amateur when it comes to linking vastly different companies under one umbrella. His other holding company consists of the cosmetics maker Revlon and the camera-maker Panavision, as well as film manufacturers and pharmaceutical companies.
"The companies are not necessarily synergistic, but they all fit a certain profile," said Christine Taylor, a spokeswoman for M&F. Because of its stable profile and good cash flow, Clarke "fit our investment profile," she said.
M&F paid $800 million to buy Clarke from Honeywell International Inc., and the printer generated more than 87% of M&F's $178 million in third-quarter revenue.
Clarke operates the well-known direct check business Checks in the Mail. In addition its B2Direct operation sells marketing and branding materials to Wal-Mart Stores Inc. and the cosmetics maker Mary Kay Inc. A third business segment sells cash containers, deposit stamps, and other treasury products to restaurant chains and other businesses that need a safe way to deposit large sums.
The non-Clarke portion of M&F's third-quarter revenue, $22.7 million, came from Mafco, which sells licorice flavoring. About three-fourths of its sales are to tobacco companies, which use licorice to flavor pipe and chewing tobacco. The remainder of Mafco's revenue comes from sales to candy companies and the sale of "licorice root residue," branded as garden mulch.
Check printing and tobacco are declining businesses, which M&F acknowledges could slow its revenue growth. In its 2005 annual report, it cited market research predicting that the number of checks printed industrywide would decline by about 3.7% annually from 2004 to 2009. It also noted that U.S. cigarette consumption had declined by 2.6% annually from 1996 to 2005.
