Deseret Book buys 2 top competitors

Covenant, Seagull bought without layoffs or closures

Published: Friday, Dec. 29 2006 12:08 a.m. MST

Deseret Book has acquired former competitors Covenant Communications and its sister company, Seagull Book & Tape.

Financial details of the transaction were not released. But the deal announced Thursday brings the curtain down on what had been a tumultuous year for the companies, which had been tangled in disputes about merchandising and marketing.

The deal was initiated by Seagull and Covenant founder Lewis Kofford and finalized Thursday.

"I've been looking for an exit strategy for a number of years," Kofford told the Deseret Morning News. "This presented itself, so I'm very happy with it."

Both Seagull and Deseret Book sell primarily religious books and merchandise targeted at members of The Church of Jesus Christ of Latter-day Saints. Covenant is a publishing house for such products.

As recently as July 2006, Deseret Book and Seagull Book & Tape said they were in talks "to explore options for addressing the differences that have existed between (the) two companies," which according to Deseret Book executive vice president Jeff Simpson included disagreements about how Seagull merchandised, marketed and promoted Deseret Book products.

Earlier in the year, Deseret Book threatened to pull its products from Seagull stores over those same issues.

Kofford said Thursday that what started with a meeting between adversaries underwent a transition during the last six months.

"It started out as an adversarial situation, but as we started talking, what came out of it on all sides was more of an appreciation," Kofford said. "And as we got into more open communication, the acquisition and the things it offers to the market became something that made sense to all parties."

Going forward, the two companies will continue to operate independently, and all existing relationships with authors attached to both companies will remain intact, the companies agreed. There will be no layoffs or store closures, and existing management teams will remain in place.

"We are not going to merge retailers; we are not going to merge publishers. We're going to let Seagull be Seagull, and we're going to let Deseret Book be Deseret Book," said Sheri Dew, president and chief executive officer of Deseret Book. "They've co-existed before, and all found their markets and have been successful."

Dew called the acquisition "a significant step, an important step and a surprising step," but ultimately one that made sense.

"What we've done is typical of both the publishing and retail industries, both of which Deseret Book has been involved with for years now," Dew said, pointing to examples like Nordstrom, which operates Nordstrom and Nordstrom Rack, as well as the many divisions and labels at publishing houses like Doubleday.

Looking at Seagull and Covenant, Dew said Deseret Book saw a way to reach more customers and a wider market.

"We knew Covenant well, because they've been our competitors for years," Dew said. "They're strong, and they've tended to be strong where maybe we're not as strong. Each of us has our unique strengths, and this (deal) allows us to expand our ability to reach a broader array of customers, both as a publisher and a retailer."

For Seagull or Deseret Book customers concerned about what effect the acquisition will have on the operations at the respective companies, Dew and Kofford sent their assurances.

"Why would we buy them, only to change them and have them be us?" Dew said. "For those who like Seagull, I'm happy to reassure them that Seagull will be Seagull, and that's just how it is. We're certain that there's a place in the market for both (Seagull and Deseret Book, Covenant and Deseret Publishing), and that they'll both do very well."

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