Day Runner Organizes an $80.5-Million Bid on Filofax

Day Runner Inc., an Irvine maker of organizers and daily planners, said Thursday it has made an unsolicited $80.5-million bid to buy British competitor Filofax Group Plc.

The proposed acquisition of Filofax, which would be by far Day Runner’s largest acquisition to date, is part of the Irvine company’s strategy to expand internationally.

Filofax, which makes stationery products, advised shareholders to take no immediate action on the offer.

In documents filed Thursday with the Securities and Exchange commission, Day Runner said it has closely followed Filofax in recent years and observed how the company has “struggled to find a way forward. . . . “

Day Runner said it was “astounded” when Filofax had contacted a number of parties over the past year to discuss “strategic alliances, joint ventures and the sale of the group” but failed to talk with Day Runner.

Day Runner said it is in many ways “the logical international partner” for Filofax because the two companies have complementary geographical coverage and distribution channels.

“We are offering a serious price for an under-performing company that lacks direction,” said Day Runner Chairman Mark Vidovich, who was in London on Thursday to announce the proposed purchase. “Filofax needs Day Runner’s skill to develop the brand further and take the business forward.”

Filofax officials could not be reached for comment.

Day Runner said its cash offer of about $3.36 per share for Filofax is nearly 43% above the stock’s Wednesday price of about $2.34 a share. Day Runner stock was unchanged in Nasdaq trading Thursday, closing at $19.13.

Day Runner said the combination would benefit shareholders of both companies. Day Runner’s sales are stronger in the United States and Canada, while Filofax has a heftier presence in the United Kingdom and Europe, said Judy Tucker, vice president of business development for Day Runner.

Filofax also sells largely in department stores and established retail outlets, while Day Runner uses emerging retailers and mass market distribution channels, such as Kmart and office products superstores, she said.

Should Filofax shareholders approve the sale, Day Runner “would not anticipate any major layoffs” Tucker said.

“This is about incremental sales, not about cutting costs,” she said. “This is not about going in and slashing and burning.”

Day Runner had made three small acquisitions over the past 15 months.

In July 1997, the Irvine company bought its Canadian distributor, Ultima Distribution Inc., for about $130,000. Two months later, it bought Ram Manufacturing Inc., an Arkansas-based maker of wall boards, for approximately $2.4 million, while assuming liabilities of about $3 million.

In February, Day Runner bought Timeposters Inc., a Canadian maker of planning and presentation products, for about $2.5 million.

Day Runner said the Filofax acquisition would initially dilute earnings but would boost income for fiscal 2000.

The company’s net income for the fiscal year ended June 30 increased 27% to $15.9 million, or $1.27 a share, from $12.5 million, or 95 cents a share, for the previous fiscal year. Sales advanced 32% to $167.8 million from $127.4 million.

Day Runner’s offer will be in effect for a minimum of 20 business days but may be extended for an additional 40 days.