With the announcement of a pair of large deals in the past two weeks, Cahners Business Information, New York, continued bulldozing its way into becoming a b-to-b Internet player.
On April 3, Cahners, a unit of London-based Reed Elsevier plc, announced a joint venture with database company Aspect Development Inc. to transform Cahners' Manufacturing Marketplace into an e-commerce site.
"It's an excellent move," said Roland DeSilva, managing partner of DeSilva & Phillips Inc., a New York-based investment bank. "What they're doing is taking their legacy community, which are their readers, and transferring that loyalty to the Internet."
A week earlier, Cahners announced it had agreed to acquire CMD Group, an Atlanta-based construction industry information company, for $299.5 million. The deal is intended to bolster the company's Web strategy in the construction market. "It gives us higher-value data," said Cahners COO Brian Nairn of CMD, which provides project, cost and product information to contractors and architects.
With Mountain View, Calif.-based Aspect, Cahners plans to form a new company called Manufacturing.Net L.L.C. To Cahners' existing Manufacturing.Net Web site, which aggregates content from Cahners' 23 industry publications and has more than 220,000 registered users, Aspect plans to add e-commerce capability.
Specifically, users of www.manufacturing.net will be able to access Aspect's maintenance, repair and operations database, search for and compare products with the database, and buy products from the Web site. The database will include 1.8 million products from 6,000 manufacturers in categories ranging from abrasives to welding equipment.
In providing a site for commerce and unveiling plans to charge transaction fees, Cahners flirts with crossing the traditional line between editorial and advertising, some industry observers contend. But John Sateja, senior VP-marketing for Manufacturing.Net, said, "We've always been facilitating marketplaces one way or another through our trade publications and lead generation. This is an evolution of what we've always been doing."
Marc Teren, Cahners CEO, had expressed concern that Cahners "facilitate" but not "own" marketplaces. In a previous interview, he said, "I am comfortable with Manufactur-ing.Net's plans."
Second time around
Cahners' acquisition of CMD is more of a pure content play, and it's content that Nairn likes so much he's bought the company twice.
The first time, Nairn was part of a team that purchased CMD (formerly Construction Market Data) in the late 1980s for Southam Inc. in Don Mills, Ontario. Now, he is the driving force behind Cahners' acquisition. "I think it's a great product," he said.
CMD's main products include:
â¢ Construction Market Data, the company's flagship line of regional and national directories of construction project information and sales leads.
â¢ Architect's First Source, print and online directories of building products.
â¢ R.S. Means, which provides construction cost data and other services both in print and online.
Cahners currently uses a sliver of CMD information on its Buildingteam.com Web site, which aggregates information from Cahners construction and architectural industry publications. Nairn said Cahners may scuttle Buildingteam.com in favor of the CMD Web site.
"We'll now be revisiting our electronic strategy," he said. "It may not involve Building-team.com. We may leverage the CMD brand."
Cahners plans to use CMD to compete more directly with industry leader The McGraw-Hill Cos., New York.
McGraw-Hill's construction information group includes Architectural Record, Engineering-News Record and Design Build magazines; F.W. Dodge construction project information; and Sweet's Group construction product information.
Cahners' relationship with McGraw-Hill has grown contentious lately. In a lawsuit filed in February in federal court, McGraw-Hill accused Robert Corcoran, sales manager of Buildingteam.com, of stealing information about its Web sites, including Sweets.com and Construction.com. The case is pending. A federal district judge issued a temporary restraining order preventing Corcoran from contacting Sweets customers.
Norbert Young, president of McGraw-Hill's construction information group, which is the clear information leader in the $850 billion U.S. construction market, acknowledges that CMD has taken market share from McGraw-Hill in recent years. He said, however, the market is large enough for the two companies to co-exist.
"We like competition," Young said, "as long as it's fair."