Scholastic chairman Richard Robinson expects the pending acquisition of Grolier to increase Scholastic's operating income by approximately 30% in the next few years. Robinson told PW Scholastic will reach that goal by achieving annual cost savings of $20 million and by generating another $10 million in revenues through the cross-selling of Scholastic and Grolier products.
Robinson said the two major factors in Scholastic's acquisition of Grolier were Grolier's strength in the direct-to-home market and its position in the school library market. "We've been looking for ways to get access to the library market for some time," Robinson said. Grolier has an $80-million library business that is supported by 150 salespeople. The sales force will now sell appropriate Scholastic materials to the libraries, while Scholastic's classroom sales force will sell Grolier products to its market.
Grolier's direct-to-home division will provide Scholastic with a major new distribution channel. Grolier has a $270-million direct-to-home business, with a database of three million parents, while Scholastic's home continuity program has sales of $80 million and a one-million-parent database.
Robinson said Scholastic plans to use the Grolier name on all its library reference materials. "They have a great reputation among school librarians," he observed. Grolier's Danbury office, which houses telemarketing and order processing, will remain open, Robinson said. The Orchard Books imprint, based in New York, will become part of Scholastic's trade operations. Robinson expects cost savings to come primarily from economies of scale in order processing, fulfillment, manufacturing, distribution as well as overhead reduction.
Robinson said he hopes the deal can close by the beginning of Scholastic's fiscal year June 1, although he expects that they may miss the target by a few days.
