DCS Buys Stantek as Non-OEM Cartridges Business Continues to Consolidate
Distributor DCS has purchased some cartridge-manufacturing assets with its acquisition of Stantek
On January 3, Diversified Computer Supplies, Inc., (DCS) announced that it has acquired Stantek, LLC. The move is just another example of the rampant consolidation in North America’s non-OEM supplies industry. It has become increasingly important to become vertically integrated in the non-OEM supplies business. Through the acquisition of Stantek, DCS, which is primarily a distributor, gains access to cartridge-remanufacturing capabilities.
DCS is an Ann Arbor, MI-based distributor of imaging supplies. The firm has facilities in Michigan, Florida, Quebec, and now—through its acquisition of Stantek—Kentucky. DCS describes itself as “leading wholesaler of OEM and compatible consumables to thousands of independent dealers throughout the world.” DCS distributes both OEM printer and MFP cartridges as well as compatibles for more than 20 brands of equipment. We suspect that DCS sources these compatibles from another vendor and then rebrands them, although the company declined to respond to our questions about the acquisition and its business activities. DCS markets its compatible cartridges under the TREND and Sharper Image brands. Sharper Image filed for bankruptcy and closed down all its stores in 2008, but the brand lives on via licensing deals (see article). With the Stantek acquisition, DCS will be able to produce cartridges as well as distribute them. DCS also distributes Copystar, Kyocera Mita, Samsung, and Sharp printers, MFPs, and fax machines and offers its own managed print services (MPS) program, called OptiPrint.
Stantek, LLC, is a contract manufacturer based in Lexington, KY. Stantek got its start in 1989 as a Sanmina-SCI-owned manufacturing facility for OEM cartridges in Stanton, KY. Sanmina-SCI operated the site until 2003, when it decided to shutter the facility and move OEM cartridge production to Mexico. Some former Sanmina-SCI employees decided to acquire the site, founded Stantek, and began remanufacturing toner cartridges there. It is unclear whether or not Stantek produces compatibles as well as remanufactured cartridges, although we could find no mention of compatibles on the company’s website. Stantek also manufactures civilian and military industrial products (see examples). Stantek distributes its remanufactured cartridges via other cartridge manufacturers and resellers.
According to the two firms’ press release on the acquisition, DCS was motivated to acquire Stantek as part of its “strategy of becoming the focal point for independent dealers.” The release states that the two firms together will have over 125,000 square feet of manufacturing and distribution space in North America and a sales volume greater than 150,000 cartridges per month, although it is unclear how much manufacturing space and cartridge sales volume each of the two firms is bringing to the table.
Neither DCS nor Stantek has revealed anything about the terms of the acquisition or whether the deal might affect any current facilities or headcount. The deal is clearly beneficial for DCS as it provides it with some significant manufacturing assets and will allow it to add remanufactured toner cartridges to its lineup of OEM and compatible cartridges. The move should also benefit the firm’s OptiPrint MPS program, as remanufactured cartridges can be a key means of reducing costs under such programs.
The DCS/Stantek deal follows Katun’s recent acquisition of Media Sciences (see Actionable Briefing, “Katun Buys Media Sciences: Is It a Good Fit?”). Could a trend be developing? It will be interesting to see if other third-party supplies distributors in North America add manufacturing assets. It makes sense for distributors like Katun and DCS to add cartridge-manufacturing capacity. By adding manufacturing, distributors can broaden their products lines and presumably garner greater profits from those products manufactured in-house. If, in fact, mergers of distributors and manufacturers is the wave of the future, it will mean the reversal of the trend the industry has seen over the past decade as manufacturers morphed into distributors and looked to source their cartridges from cheap overseas suppliers.
Tags: DCS, mergers and acquisitions, non-OEM cartridges, Stantek