Quipp Inc. President and Chief Executive Officer Mike Kady said the pending purchase of the postpress vendor by Illinois Tool Works Inc. will result in a company better positioned to invest in new technologies and serve customers.

“With ITW’s backing, we’ll have a company that has the human and financial resources available to help us improve operations and develop new products,” Kady told Newspapers & Technology.

“This deal, frankly, was appealing to us,” he said. “(ITW) is the type of parent that Quipp needs. It’s a dynamic company that achieves its goals on a regular basis. Having that kind of backing is important.”

ITW last month said it would purchase Quipp for between $4.30 and $5.65 per share in a transaction expected to close later this spring. Depending upon the agreed-upon price, the value of the deal could be anywhere between $6.4 million and $8.4 million.

Kady said Quipp had been discussing possible options with ITW for the past year, primarily through ITW’s Signode Packaging Systems unit. Quipp uses Signode’s strapping mechanism as part of its Packman system.

“We knew ITW through Signode, and in examining where they might grow their business, we wondered if it made sense to talk about a more formal arrangement between the two companies,” Kady said. “Those talks got serious and here we are.”

Kady said he expects little change to Quipp’s executive staff or Miami facilities once the transaction is finalized, citing ITW’s decentralized business philosophy.

“ITW is not interested in buying a business if the executives aren’t there,” he said. “This isn’t an issue of them buying us to consolidate their operations.”

End of independence

The potential purchase marks the end of independence for Quipp, which was founded in 1983 by James Quakenbush and Louis Kipp. The company made a splash almost immediately with its SJ100 stacker and twin-track conveyor, and then followed those products in the late 1980s with the Quipp-Gripp I gripper-conveyor and model 300 stacker.

In 1995, Quipp purchased competitor Hall Co. and also diversified its product line with a palletizer and the second-generation Quipp-Gripp II conveyor.

Five years ago, Quipp introduced its first inserter, the Quipp In-Line inserter, after purchasing USA Leader; and it also rolled out the Quipp Packman a combination bottomwrapper, stacker, inkjet and strapper.

It made its last acquisition in August 2005, when it acquired Newstec Inc. and integrated the Massachusetts-based firm’s inserter and inserter control software into its product line.

Bulk of operations

Quipp’s products are found in more than 90 percent of American newspapers’ postpress departments and several papers, including the Waco (Texas) Tribune-Herald, have used Quipp to equip the majority of their mailrooms.

Still, like many other newspaper vendors, Quipp’s financial fortunes began to slip as capital expenditure budgets were capped by publishers eager to cut costs.

As a result, over the past two years, Quipp lost almost $6 million and during the fourth quarter of 2007 it was forced to record a $1.03 million charge related to loss in value of Newstec.

ITW spokeswoman Alison Donnelly said the possible purchase of Quipp would mesh with its existing packaging businesses, which now account for more than 15 percent of the company’s $14 billion in annual revenues.

“We’re always interested in buying businesses that complement our existing business,” she said.

ITW, based in suburban Chicago, owns more than 800 businesses and employs more than 60,000 people.