Pitney Bowes to Acquire Group 1 Software

Pitney Bowes today announced its intention to acquire Group 1 Software for approximately $321 million -- a move that could help their marketer customers lower their direct mail costs. The acquisition, which is subject to stockholder approval, is expected to close next quarter. Group 1 has been blazing a path of success as a global provider of integrated mail, messaging, and document management solutions. The company has been a growth anomaly during a difficult economy, raising revenue 17 percent from $89.4 million in 2002 to $104.3 million in 2003. Its success begs the question, why an acquisition? "The base data quality market is looking more and more like a commodity. Group 1 may feel that they have a better chance to put forward a complete solution as part of a larger company," says Erin Kinikin, vice president and research director at Forrester Research. Perhaps particularly interesting to Pitney Bowes is Group 1's deep history with mailing-efficiency solutions. Group 1's Universal Coder, released last August, provides a single interface incorporating its United States, Canadian, and global address validation, correction, and standardization technologies. "One of the immediate benefits of good customer data is lower marketing direct mail costs," Kinikin says. "Companies without good data quality pay 10 to 20 percent higher mailing costs due to duplicate mailings and bad addresses. Group 1 can help Pitney Bowes lower the total costs of sending direct mail, statements, and other documents for its customers." Additionally, in February 2004 the United States Postal Service certified Group 1 as an NCOA/Link Interface Developer and Distributor Provider. This enables Group 1 to market and sell its MOVEfast software, which supports the NCOA/Link program. (NCOA/Link is a technology platform that gives mailers access to up-to-date address information for customers who have moved.) It also helps that Pitney Bowes and Group 1 have had a mutually beneficial partnership for the past three years, in which Pitney Bowes resold Group 1's DOC1 suite for personalized customer communications and messaging campaigns across multiple channels. Group 1's DOC1 sales represent approximately a third of Group 1's overall revenue, says David Peikin, corporate communications manager at Group 1. "[Pitney Bowes has] a lot of hardware and software and plays in both the document and address management spaces. It's a really good fit," Peikin says. Group 1 will operate as a wholly owned subsidiary of Pitney Bowes within its Global Enterprise Solutions unit and continue to operate under its current management. The company's headquarters are expected to stay in Stamford, CT. Group 1's biggest competitors have traditionally been data quality companies, including Trillium and Firstlogic. "As to how that changes, that's a Pitney Bowes question," Peikin says. Pitney Bowes was not available for comment at press time.