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Systems
Are Go
New Haven's Systems to be acquired by A-Copy parent
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Business New Haven
11/6/1995
By: BNH
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Recent radio advertisements for their office copiers and fax machines have touted the “locally owned and operated” Systems Inc. of New Haven, one of the state's largest independently owned office product dealers. A key selling point of the ads is System's “guaranteed local service.”
No more. The company is close to being acquired my a major out-of-state rival, BNH has learned.
According to Charles N. Wooding, vice president and controller of the Glastonbury-based A-Copy, a subsidiary of Alco Standard Corp. of Valley Forge, Pa., “[Systems President Wiiliam] Palumbo and stockholders have signed letter of intent to be acquired by Alco Standard. The deal is now subject to due diligence” by attorneys for both parties, Wooding adds, but is “contemplated to close within three to four weeks.”
While officials at Systems would neither confirm nor deny the impending sale, Wooding says: “It's a pretty solid deal. We've seldom come this close [to an acquisition] and had something fall apart.”
Alco Standard is a $10 billion national company and currently has the largest network of office equipment dealers in Connecticut, Wooding says. Systems Inc. generates about $13 million in annual sales, he says.
The deal came about quickly (“less than a month,” according to Wooding) and was initiated by Systems. For Alco, however, the acquisition made for a seemingly good fit.
“Their size and reputation in marketplace” made Systems an attractive acquisition, Wooding explains. “We've competed against them in greater New Haven for a number of years, and we know what a good competitor they are. We also know the quality of some of the people in their organization, and that's a plus, too.”
The Thinking at the Top
Entrepreneurs optimistic about own firms' growth, pessimistic about help from Clinton
This week entrepreneurs from North and South America and Europe will gather in Palm Springs, Calif. for the ninth annual Entrepreneur of the Year Institute (EOYI) International Conference. That group will include 1995 southern New England Entrepreneur of the Year award recipients Adam J. Bozzuto, chairman of the Cheshire-based Bozzuto's Inc., as well as Marie and Weston Pullen, co-chairmen of Computers 4 Kids of Waterbury. The awards are sponsored by Ernst & Young, Merrill Lynch and Inc. magazine.
A national survey of EOYI members reveals that top entrepreneurs foresee increased competition, an escalating battle for talented employees, hitherto unimagined applications for new technologies, possible legislative gridlock and - not surprisingly, given the buoyant optimism characteristic of most successful entrepreneurs - continued growth for their businesses.
The survey (see chart) polled CEOs of 400 fast-growing middle-market U.S. companies accounting for more than $155 billion in annual revenues and 1.3 million employees in manufacturing, services, wholesale, retail, construction, high technology and real estate.
With regard to the overall business climate, 60 percent of respondents envisioned an economy conducive to growth in the coming year, an 11-percent increase over the previous survey. Also, the percentage who anticipated less-than-favorable economic conditions declined from 15 percent to 11. Nearly three-quarters of respondents believed their profits would increase in the year to come.
Between 60 and 70 percent of CEOs calculated that growth would come from developing new products and services and by expanding their domestic market base. Of overseas markets, their greatest percentage cited Western Europe as the most promising arena for new or enhanced trade. More than 40 percent of respondents said they would look to upgrade their firms' operations technology and invest in enhancing financial systems and information in the coming year.
Asked about business financing, most respondents said they believed borrowing from traditional bank sources over the next 12 months would be as easy or easier than last year. Nevertheless, fewer of them planned to actually borrow: The percentage of firms with revenues of less than $15 million who planned to raise capital fell from 65 to 46 percent, while the decline among the largest companies (revenues in excess of $40 million) was even larger - from 63 to 36 percent.
One final point: Respondents overwhelmingly believed that entrepreneurial activity was a very low priority of the Clinton administration. Barely three percent thought new businesses were a high priority for the While House, while 43 percent characterized entrepreneurial business as a low priority - and 40 percent as no priority at all.
Brown's Derby
Foxwoods' Mickey slips in details of Pequots' Bridgeport casino bid
As the state legislature reconvened to act on the proposed Bridgeport gaming casino and interested parties jockeyed for position at press time, BNH spoke with Foxwoods Resort & Casino CEO Mickey Brown about the Mashantucket Pequots' bid to operate the state's second “full-service” gaming enterprise.
The stakes are enormous - upwards of $1 billion in estimated annual revenues. Under the proposal advanced by Gov. John G. Rowland, the Pequots would upon approval move quickly to open two temporary gaming facilities - 25 percent of the revenues from which would go to the state's coffers - during the estimated three years it would take to erect a permanent casino/entertainment complex. The tribe also proposes to direct ten percent of net profits from both the temporary and permanent casinos toward a state-managed economic-development fund to benefit Bridgeport and, perhaps, other distressed Connecticut cities. According to Brown: “That fund in the first four years would develop between $35 and $40 million dollars. Once the permanent facility is open, we would anticipate that the fund would grow at a minimum of $20 million per year.”
Brown explains how his group's proposal would likely unfold: “We propose two temporary casinos: one a 247-room hotel at the Day's Inn, which is a closed facility owned by the city of Bridgeport. We would acquire it from the city and add a two-story building adjoining the existing hotel.” There a 100,000-square-foot casino would open within six months of final approvals and ground-breaking - in all, a $72 million project.
“The second part,” Brown explains, “would be the acquisition and renovation [estimated to cost $45 million-$50 million] of the Verazzano, a retired Staten Island ferry. It would be renovated to house 60,000 square feet of gaming space and it would be moored on the Pequonnock River. That would open six to eight months from final approval. We would operate the two temporary facilities, giving the state 25 percent tax on our gross revenues [from slot machines and table games] during the operations of the temporary facilities.”
At the same time, Brown says, his group would move to acquire a site currently owned by the United Illuminating Co. and build a permanent $575 million facility which would include a 500-room hotel and an 80,000-square-foot casino, six restaurants, a health club, showroom and 30,000 square feet of retail space. Foxwoods has 194,000 square feet of gaming space, including a 60,000-square-foot bingo hall.
Explains Brown: “We had been the sole casino in New England since 1992, and like any other exclusive business we would love to retain that exclusivity. But once the tribe became convinced that the state was serious, and that the administration and the legislature wished to go forward and develop a casino in Bridgeport, we felt we were the most qualified developer.”
Brown says that New York gamblers account only about six percent of the Foxwoods' $800 million-$900 million annual gross, but would likely represent as much as 60 percent in Bridgeport.
Under the original compact negotiated by then-Gov. Lowell P. Weicker Jr., Foxwoods holds an exclusive franchise to operate slot machines in the state, a provision that has placed other parimutuel facilities such as Milford Jai-Alai and Sports Haven in opposition to expanding that exclusivity into Connecticut's largest municipality. Brown says the Pequots have met with some parimutuel operators and lobbyists. “We're willing to discuss non-slot machine assistance for those operators,” he says.
What kind of “assistance? “It might be a way to create a tax-assistance situation,” Brown says, “where they would get some tax relief, either from the gaming tax or property tax [money that goes back into the city].”
Brown acknowledges the presence of some “wiggle room” for slots at a new Bridgeport dog track, though the Pequots do not favor it. “We had to submit a scenario B, which was a single casino with slots at one or more parimutuel facilities,” he explains. “We didn't support that proposal and we don't at this time, but were asked to make it, so we made it.”
Regarding concerns that the entertainment component of a Bridgeport casino would adversely affect such New Haven facilities as the Palace Theater, Shubert Performing Arts Center and Veterans Memorial Coliseum, Brown says, “Anything that improves tourism along the I-95 corridor is going to benefit everyone on the I-95 corridor.”
Of opposition to the Pequots operating a second Connecticut gaming facility, Brown says: “Some of it is fear of economic power centralized in one company - although [opponents] don't seem to have the same attitude when it comes to Pfizer and Electric Boat. I think some of it is outright racism and prejudice against Indians making too much money.”
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