Wednesday, May 6, 2015

Catching the Falling Knife versus Personal Branding – April 2015 M&A Activity


A Maine newspaper group has cleaned up its balance sheet, improved the quality of its journalism, and plans to improve the efficiency of its print operations. MaineToday Media announced that it is being purchased by local businessman and publisher Reade Brower. Brower teamed up with Chris Miles, his partner in another venture, Alliance Press, to purchase the papers from billionaire hedge fund manager S. Donald Sussman. Sussman saved MaineToday Media, Maine’s dominant news organization, from almost certain closure in 2011 when he purchased the insolvent company from HM Capital Partners. 

Sussman reportedly invested a total of more than $16 million in the publishing company. He appears to be walking away happy even though the entire proceeds from the latest sale are going to pay down company debt. In an eloquent commentary on the value of maintaining high journalistic standards in the print medium, Sussman stated that it was his “honor to have been the steward of these trusted newspapers.” It remains to be seen if the buyers have caught the falling knife (the company has been sold four times in 17 years, each time for far less than before), or if they can continue to uphold the “value of local, quality journalism and the civic responsibility the paper has to its community.”

This commitment to produce exceptional reporting stands in stark contrast to the model of delivering repetitive, regurgitated content delivered via online aggregators. Poor quality content apparently does not hold up, as evidenced by the recent closure of the Philadelphia-based company Brand.com. Originally named Reputation Changer, the company was in the business of writing positive articles about folks who had numerous negative online reviews. The company then flooded online sites with the ersatz positive articles in hopes that the onslaught would push negative articles below page one on Google. When Google got wise and changed its algorithm to minimize the effectiveness of the article blitz, Brand.com switched gears. In the journalistic version of advertising disguised as independent reporting (so-called “native advertising”) the company began offering “commission reporter-written articles.” The strategy failed, there was no billionaire hedge fund savior for Brand.com. The company filed for Chapter 7 liquidation in April.

Note: As regular readers of The Target Report will know, we usually steer clear of the “defense-of-print” debate and leave that to others. The chips will fall where they will as consumers make their decisions on the value of content within competing media channels and vote by how they view their news, read their books, obtain intellectual content and respond to advertising. Nonetheless, we think that the above contrasting developments are interesting and moreover, we suspect that the folks in Maine are happy to have reporting they can trust, sustained through the survival of their local newspapers.

Commercial Printing

Acquisition activity in the commercial printing segment picked up. As we have predicted in our last two annual projections, wide format printing companies continue to be attractive targets for commercial printing companies which seek to cross-sell the new services into their existing clients. As a bonus, the acquiring company adds new clients for their traditional printing services. NextPage in Kansas City, Missouri acquired Print Big Solutions, stating this exact strategy as their rationale for the deal. DOME Print & Marketing Solutions, a web and sheetfed commercial printer in Sacramento, California, acquired wide format printer Color Solutions. With backing from Ancor Capital Partners, Tennessee-based Identity Group Holdings acquired retail signage supplier Allen Screen Printing in Maine.

Commercial printers consolidated with other commercial printers. MET Fine Printers, located in Vancouver, British Columbia acquired Rhino Print Solutions with facilities in Vancouver and Calgary, Alberta. Neuger Communications Group acquired Engage Print, both located in Northfield, Minnesota. Grafika, a printer in Sinking Spring, Pennsylvania, acquired Reading-based Offset Impressions.

PE fund Waveland Investments picked up retail circular printing company Doodad with facilities in Georgia and Pennsylvania.

Marketing Services

Atlanta-based marketing services provider and printing company Phase 3 Marketing & Communications acquired boutique creative studio Brand Fever. The acquiring company offers traditional services including digital and offset printing, graphic design, warehousing and fulfillment, and has also moved upstream into branding, strategic planning and social media.

Packaging

The packaging segment was uncharacteristically quiet in April, however Pratt Industries, which has common ownership ties to papermaking assets in Australia, picked up Robert Mann Packaging for $60 million. The acquired company will use imported lightweight kraft paper from its new owner to produce its corrugated cartons which are used primarily for packaging food and other agricultural products.

Lettershop & Direct Mail

EU Services in Rockville, Maryland, announced the acquisition of Sisk Mailing Service. The Sisk operations were integrated into EU Services’ two locations. EU Services was itself acquired in August, 2014 by Maidstone Capital, which also owns Com-Pak Services in Moorestown, New Jersey.


2015 April - Mergers and Acquisitions in the Printing, Packaging, Paper & Related Industries  

Deal Party #1
(Surviving Entity)
Pre-Deal
Revenues
($Mil )


Party #1 Address


Deal Party #2
Pre-Deal
Revenues
($Mil )


Party #2 Address
Date
Deal
Public
Deal
Value
($Mil)

Deal Structure
(Intermediary)


Notes

Press
Releases
NextPage No Data Kansas City, MO Print Big Solutions No Data Kansas City, MO 4/29/15 No Data Acquisition Wide format printing Link
MTM Media No Data Bath, ME MaineToday Media No Data Portland, ME 4/28/15 No Data Acquisition Daily & weekly newspapers Link
Proforma Signature Solutions No Data Brooklyn
Heights, OH
Artistic Printing No Data Artistic Printing & Specialty Adv. 4/23/15 No Data Acquisition Print distributor Link
Neuger Communications Group No Data Northfield, MN Engage Print No Data Northfield, MN 4/21/15 No Data Acquisition Commercial printing Link
Grafika No Data Sinking Spring, PA Offset Impressions No Data Reading, PA 4/21/15 No Data Acquisition Commercial printing Link
Advisors Excel No Data Topeka, KS Modern No Data Valparaiso, IN 4/20/15 No Data Acquisition Printing & CD/DVD production Link
MET Fine Printers No Data Vancouver, BC Rhino Print Solutions No Data Vancouver, BC 4/17/15 No Data Asset Acquisition Commercial printing Link
Signarama No Data Milwaukee, WI Design Craft Signs No Data Hales Corners, WI 4/15/15 No Data Acquisition Internal signage Link
Phase 3 Marketing & Communications No Data Atlanta, GA Brand Fever No Data Atlanta, GA 4/15/15 No Data Acquisition Creative services Link
Pratt Industries $2,350 Conyers, GA Robert Mann Packaging $150.0 Salinas, CA 4/14/15 $60.0 Acquisition Corrugated cartons Link
Identity Group Holdings
(Port. Co. Ancor Capital Partners)
No Data Nashville, TN Allen Screen Printing No Data Scarborough, ME 4/14/15 No Data Acquisition
(Aleutian Capital)
Retail signage Link
DOME Print & Marketing Solutions No Data Sacramento, CA Color Solutions No Data Sacramento, CA 4/10/15 No Data Asset Acquisition Wide format printing Link
Waveland Investments No Data Highland Park, IL Doodad No Data Austell, GA 4/10/15 No Data Acquisition
(Edgepoint Capital)
Retail circular printing Link
Sun Graphics No Data Parsons, KS Donlevy Lithograph No Data Wichita, KS 4/9/15 No Data Acquisition Commercial printing Link
EU Services No Data Rockville, MD Sisk Mailing Service No Data Stevensville, MD 4/7/15 No Data Acquisition Lettershop services Link
Fedrigoni Group € 809.0 Verona, Italy Gummed Papers of America
(Port. co. Svoboda Capital Partners)
No Data McCook, IL 4/2/15 $50.0 Acquisition Specialty substrate distributor Link


2015 April - Bankruptcy Filings in the Printing, Packaging, Paper & Related Industries



Filing Party

Date
Case
Filed
Pre-Petition
Revenues
($Mil )



Case #



Filing Party Address



Circuit



Region & City



Judge



Attorney for Debtor



Notes
Chapter 11 Filings:
J.B Kreider Printing Co. Inc. 4/29/15 No Data 15-21510 Pittsburgh, PA 3rd Western PA
Pittsburgh
Carlota M. Bohn Donald R. Calaiaro Commercial printing
Chapter 7 Filings:
Brand.com 4/14/15 No Data 15-12565 Philadelphia, PA 3rd Eastern PA
Philadelphia
Jean K. FitzSimon Robert N. Braverman Content marketing platform


2015 April - Non-Bankruptcy Closures in the Printing, Packaging, Paper & Related Industries



Closed Company / Facility

Date of Closure
Pre-Closure
Revenues
($Mil )



Closing Address
Related Party Related Party
Address
Date Closure Public


Notes

Press
Releases
No Plant Closures Found this Month --- --- --- --- --- --- --- ---

Tuesday, April 7, 2015

Vistaprint Hits a Double with Global Acquisition Strategy – March 2015 M&A Activity














Cimpress, parent company of the phenomenal Vistaprint, continued to expand its market into additional countries by acquiring web-to-print companies that serve those countries in their native language. The company moved into France early in March with its acquisition of Exagroup. In what appears to be a departure from Vistaprint’s primary strategy in the US of selling directly to small businesses, the acquired company exclusively serves clients through a network of resellers through its online platform and white-labeled web-based store fronts. Cimpress used this strategy last year to quickly establish an extensive customer base in Italy when it acquired Pixartprinting, a web-to-print company that also uses the reseller channel to reach its customers. 

Cimpress kept running at full speed and secured a second deal in March, reaching southward from its home base in the Netherlands to acquire Austrian web-to-print company Druck.at. The acquired company in German-speaking Austria reaches its customers both through resellers and directly to small and medium business customers. Similar to its deal when it acquired the Brazilian company Printi in October 2014, Cimpress gains an immediate presence in the targeted country’s language, which I suspect is especially critical to successful market penetration when the product itself is the printed word.

For the French connection, Cimpress paid €91.5 million for a 70 percent interest in the company. Based on the reported trailing twelve months revenue of €76 million and €14 million EBITDA (18.4%), Cimpress paid 6.5 times EBITDA for its controlling interest, valuing the total shares of the company at €130.7 million or 9.3 times EBITDA. The sellers have the opportunity to increase the final payout subject to certain benchmarks set for 2017, which could increase the price to within spitting distance of a 10 times multiple. Cimpress will pay the sellers cash at closing.

The acquired Austrian company’s revenue were significantly less than their new French teammates, with trailing twelve months revenue reported at €34 million. EBITDA for the same period was €3.6 million (10.6%). As might be expected based on the lower revenues and EBITDA percentage, the purchase multiple was correspondingly lower, but still a very respectable 6.5 times EBITDA, structured as €20 million cash at closing plus €3.3 million paid in cash or stock in 2017.

(For more about Vistaprint’s prior acquisitions, see The Target Report – October 2014 and The Target Report – April 2014)

Packaging

Packaging power hitter CCL Industries acquired two specialty companies in Madison, Wisconsin, Meetings Direct and pc/nametag. The acquired companies, previously under common private ownership, provide specialty printing and supplies to meeting planners and promotional distributors. The companies will be bolted-on to Avery North America, which CCL acquired in 2013 and which provides pressure-sensitive papers used in the newly acquired product lines. The acquired companies have combined revenues of $36 million and achieved $6.3 million in EBITDA (17.5%). CCL Industries reportedly is paying $37 million for the companies, 5.9 times EBITDA, slightly more than one times revenue.

Sonoco, another player in the ongoing global roll-up of the packaging industries, announced the acquisition of Brazilian flexible packaging printer Graffo. The company prints prime labels for confectionary and other markets using rotogravure presses and lamination processes.

Esko, a division of conglomerate Danaher and supplier of prepress systems to the packaging industry, acquired MediaBeacon. The acquisition brings an established digital asset management software component to Esko which claims that 90% of all retail packages in some way are processed through its software.

Diversified Printing & Document Management

Standard Register filed for Chapter 11 bankruptcy, pinning much of the blame for its situation on the debt it incurred when it acquired print management company Workflow One in 2013. Additional and even more substantial debt is due in unfunded pension liabilities. The company walked into court with a reorganization plan and buyer ready to go. The buyer, Silver Point Capital, is also a current shareholder, lender, and now the stalking horse buyer in the court-supervised sale process. Private investment firm Silver Point Capital has indicated that it plans to credit bid a significant portion of the purchase price. The fund has provided interim financing to fund ongoing operations. All indications are that the company will continue operating and is likely to emerge from bankruptcy in much better shape.

Commercial Printing


Edison Litho & Printing, a New Jersey-based printer known for large format offset printing, has acquired the Compass Display Group, a retail display company in Kennesaw, Georgia. In another deal focused on the retail graphic environment, California-based Federal Heath acquired DuraColor in Racine, Wisconsin. 

FLM Graphics, a diversified commercial printer in Fairfield, New Jersey, announced that it was merging with another New Jersey firm, Paravista. The combined firms will operate out of FLM’s Fairfield facilty. In another announced merger, Teagle & Little of Norfolk, Virginia, will combine with AmeriComm. The combined companies are re-branding under the new banner, Centric Communications.

Paper


The FutureMark paper mill in Manistique, Michigan, closed in March. The mill was rescued in 2011 by the state with a loan that enabled its exit from bankruptcy at that time. The new owners were unable to secure adequate financing to keep the mill operating. The closure follows a spate of mill closings announced over the past year as the paper industry continues to adjust to declining demand for printing paper grades.




2015 March - Mergers and Acquisitions in the Printing, Packaging, Paper & Related Industries  

Deal Party #1
(Surviving Entity)
Pre-Deal
Revenues
($Mil )


Party #1 Address


Deal Party #2
Pre-Deal
Revenues
($Mil )


Party #2 Address
Date
Deal
Public
Deal
Value
($Mil)

Deal Structure
(Intermediary)


Notes

Press
Releases
Whitlock Business Systems No Data Madison Heights, WI BRD Printing No Data Lansing, MI 3/22/15 No Data Acquisition Commercial printing Link
MCD (ESOP) No Data Madison, WI MCD No Data Madison, WI 3/19/15 No Data ESOP buyout Diecutting & finishing Link
B&D Binder & Index No Data Arlington, TX The Tab Shoppe No Data Ste. Genevieve, MO 3/19/15 No Data Asset Acquisition Index tabs & filing products Link
CCL Industries $2,060 Toronto, ON Meetings Direct
pc/nametag
$36.0 Verona, WI 3/19/15 $37.0 Acquisition Nametags & meeting supplies Link
Cimpress $1,400 Venlo,
Netherlands
Druck.at € 34.0 Leobersdorf,
Austria
3/18/15 € 23.3 Acquisition Web-to-Print  Link
Proforma Media & Print No Data New Braunfels, TX Business Forms No Data El Paso, TX 3/16/15 No Data Acquisition Print distributor Link
Esko
(Sub. Danaher)
No Data Ghent, Belgium MediaBeacon No Data Minneapolis, MN 3/16/15 No Data Acquisition Digital asset software Link
Finish Line Binderies &
HF Group
No Data Chesterfield, OH Riverside Bindery No Data Rochester, NY 3/12/15 No Data Acquisition Bindery services Link
Printing Arts No Data Van Nuys, CA SR3 Solutions No Data N. Hollywood, CA 3/12/15 No Data Acquisition Specialty packaging Link
Edison Litho & Printing No Data North Bergen, NJ Compass Display Group No Data Kennesaw, GA 3/12/15 No Data Acquisition Retail display Link
Federal Heath No Data Oceanside, CA DuraColor No Data Racine, WI 3/9/15 No Data Acquisition Retail graphics, OEM marking Link
Sonoco $5,010 Hartsville, SC Graffo $35.0 Pinhais, Brazil 3/9/15 No Data Acquisition Rotogravure packaging Link
Teagle & Little
(Centric Communications)
No Data Norfolk, VA AmeriComm No Data Chesapeake, VA 3/4/15 No Data Merger Commercial printing Link
Heidelberg € 2,520 Heidelberg,
Germany
PSG  € 130.0 Almere,
Netherlands
3/3/15 No Data Acquisition Dealer of press & supplies Link
FLM Graphics No Data Fairfield, NJ Paravista No Data Piscataway, NJ 3/3/15 No Data Merger Commercial printing Link
Cimpress $1,400 Venlo,
Netherlands
Exagroup € 76.0 Montpellier, France 3/2/15 € 91.5 Purchase of Majority Interest Web-to-Print
(Altium)
Link


2015 March - Bankruptcy Filings in the Printing, Packaging, Paper & Related Industries



Filing Party

Date
Case
Filed
Pre-Petition
Revenues
($Mil )



Case #



Filing Party Address



Circuit



Region & City



Judge



Attorney for Debtor



Notes
Chapter 11 Filings:
The Standard Register Company 3/12/15 $904.0 15-10541 Dayton, OH 3rd Delaware
Wilmington
Brendan Shannon Michael R. Nestor Diverse printing services
RCA Digital Printing Corp 3/27/15 No Data 15-02257 Ponce, PR 1st Puerto Rico
Ponce
Edward A. Godoy Modesto B Mendez Printing & copying
Chapter 7 Filings:
Newspaper Data Exchange, LLC 3/23/15 No Data 15-42035 Chesterfield, MO 8th Eastern MO
St. Louis
Charles E. Rendlen III John Talbot Sant, Jr. Newspaper distribution database


2015 March - Non-Bankruptcy Closures in the Printing, Packaging, Paper & Related Industries



Closed Company / Facility

Date of Closure
Pre-Closure
Revenues
($Mil )



Closing Address
Related Party Related Party
Address
Date Closure Public


Notes

Press
Releases
FutureMark Paper 3/24/15 No Data Manistique, MI None N/A 3/16/15 Recycled paper mill Link