Sunday, July 7, 2019

Print Publishing in Turmoil – June 2019 M&A Activity


The shakeout in the world of publishing continues unabated as titles in print face continued downward pressure in circulation, declining advertising revenues and inability to support the cost of editorial staffs, paper, printing and distribution. Meanwhile, the two remaining titans of magazine printing duke it out with the U.S. Department of Justice over their proposed merger. Designed to rationalize excess printing capacity with declining demand, the acquisition of LSC Communications by Quad can also be viewed as a desperate bid to gain pricing leverage over already beleaguered publishers.

One such publisher, Condé Nast, is the venerable company behind classic publications such as Vogue, Vanity Fair, The New Yorker, and GQ. Founded in 1909, the company has a long history of managing change in the media landscape and has kept up with the times with the acquisition of Wired magazine, the chronicler of emerging technologies originally inspired by the Whole Earth Catalog. In 2015, Condé Nast acquired the hip online music website Pitchfork; shortly thereafter ceasing publication of the accompanying printed quarterly magazine, retaining only the online delivery channels.

With loses reported in excess of $120 million announced last year, Condé Nast embarked on a sale process to offload its Brides, Golf Digest and W magazine titles. Brides magazine was sold in May. The buyer announced that after 85 years in print, the upcoming August/September issue will be the last time the magazine is printed, after which the publication goes to a strictly online format. Golf Digest was also sold in May. No plans were announced to cease publishing the print edition; at least that’s the scoop, for now.

In the latest resettlement of money-losing titles, W magazine moves from its prestigious ownership under Condé Nast to the less-than-glamorous stewardship of its new owner, Future Media Group. Future Media is the new holding company owned by the publisher of Surface magazine, the edgy, avant-garde design and hipster-culture, free-in-your-hotel-room glossy journal; as well as publisher of Watch Journal, the super-lux magazine distributed free at private air terminals and in luxurious high-end hotels.

The printed journals are core to Future Media’s distribution model, placed on behalf of advertisers in places of conspicuous consumption. Presumably print will continue to be a core format for W magazine; nonetheless Future Media will continue the transition, begun under Condé Nast, of W’s editorial content to online website and social media channels. Leaving no doubt about this, Future Media’s chief executive stated that the newly appointed editor-in-chief “has a forward-thinking sensibility that will bring W beyond its core print distribution into various offline, online and augmented formats.”

Meredith, the folksy Midwest publisher, has been deliberately and steadily dismantling the portfolio of Time-Life publications that it acquired in 2018. In keeping with its focus on “lifestyle” publications, primarily aimed at a female audience, Meredith has to date retained only the titles acquired in the Time-Life deal that fit this demographic audience, including Entertainment Weekly, InStyle, Travel & Leisure, and People magazine. The titles that are “newsier” and therefore contain quickly outdated information, have now all been sold, including Time Magazine, Fortune (See The Target Report: The Waning Fortunes of the Time Inc. Magazines), and Sports Illustrated (See The Target Report: Sports Illustrated Print Edition Heads to Hospice). Originally planning to sell Money magazine, Meredith announced that instead it will keep the title, however the current issue June/July will be the last in print. Money will be transitioned to online-only content.

Apparently, the U.S. Department of Justice determined that the last thing that magazine and book publishers needed was the merger of the two remaining behemoth printers and has sued to block Quad’s acquisition of LSC Communications. In an interesting twist, the Department of Justice lawsuit used the merger candidates’ own words against them, quoting several examples in which each side complained that if only they didn’t have to compete with the other, that would eliminate the last remaining impediment to establishing real pricing leverage in the market, especially for the printing and distribution of long-run high quality glossy titles.

In the event that Quad and LSC Communications prevail over the lawsuit filed by the Department of Justice to block their announced merger, the combined entity will be able to slash capacity and gain price increases. However, the ongoing reduction in the number of long and medium-run glossy publications that remain in print format may in itself be sufficient for publishers to maintain their downward pressure on print pricing.

Photobooks & Personalized Consumer Products

Shutterfly, the 800-pound gorilla in the digital photo storage, prints processing and personalized merchandise segment, announced that it was exiting the public markets and accepting an offer for $2.7 billion, including the assumption of debt, from giant private equity firm Apollo Global Management. Just to make sure that it would be the dominant player in a highly competitive and fragmented space, Apollo also announced that it was also snapping up Snapfish, an also-ran in the photo books and related online photo products printing segment.

Included with the Shutterfly deal, Apollo will also own Lifetouch, the photography and photo print company that Shutterfly acquired in January 2018. When Shutterfly announced the acquisition of Lifetouch, its market value soared as investors became enthusiastic about Shutterfly’s access to the 25 million students that Lifetouch photographs each year. That excitement did not last long when the projected synergies did not develop. Shutterfly’s stock price was overexposed and quickly retreated to levels not seen since 2016, creating an attractive opportunity for Apollo’s move to consolidate the segment.

Commercial Printing and Diversified Services

Mittera continues its national roll-up strategy with the acquisition of Sprint Denver, a commercial printing company. The Sprint manufacturing operation is slated to be consolidated into Mittera’s existing facilities. Mittera already has a facility in Denver, acquired with the purchase of the assets of Kansas City-based Henry Wurst company. The deal to acquire Sprint is the latest in a long string of acquisitions for Mittera, effectively a roll-up of roll-ups. (See The Target Report: Consolidation in Commercial Printing Rolls On).

Xpressdocs, a self-service on-demand marketing company based in Fort Worth, Texas acquired Amazingmail, a Phoenix, Arizona-based self-service direct mail printing company that utilizes proprietary software to connect with and support national brands with print runs as unique as one piece or up to many thousands per day. Xpressdocs completed the transaction with backing by private equity firm Falcata Capital.

Colortree Group, a Richmond, Virginia direct mail components printing company, closed its doors in June. This sudden closure was an abrupt about-face from the optimistic picture painted in 2017 when management acquired the company from Boathouse Capital. Boathouse had originally backed management in 2011 in a roll-up strategy, starting with the combination of two Virginia direct mail printing companies, Colortree and Graphic Innovations. The roll-up strategy apparently stalled after the 2013 acquisition of Direct Impressions, another Virginia-based direct mail printer. Eventually, Boathouse bailed out and sold the company back to the original management via the newly formed and oddly named entity, the Stingem Management Group. Unfortunately, it’s the 240 employees of this $57 million revenue printing company that got stung.



2019 June - 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
Release
HP Inc. $58,700 Palo Alto, CA OneFlow Systems No Data London, UK 6/26/19 No Data Acquisition Workflow software system Link
Future Media Group No Data New York, NY W Magazine
(Prop. Conde Nast)
No Data New York, NY 6/25/19 No Data Acquisition Magazine publisher Link
Randa Duncan Williams No Data Houston, TX Texas Monthly Magazine
(Port co. Genesis Park)
No Data Austin, TX 6/25/19 No Data Acquisition Magazine publisher Link
Toppan Printing $13,000 Tokyo, Japan Interprint No Data Arnsberg, Germany 6/24/19 No Data Acquisition Industrial décor printing  Link
AlphaGraphics
Div. MBE Worldwide
No Data Lakewood, CO Print Speak No Data Sydney, Australia 6/18/19 No Data Acquisition Print MIS dashboard Link
Xpressdocs Partners No Data Fort Worth, TX Amazingmail No Data Phoenix, AZ 6/18/19 No DataAcquisition
(Woodbridge)
Direct mail printing Link
Paxton Media Group No Data Paducah, KY Lebanon Democrat ( & others)
(Prop. Sandusky Newspaper Group)
No Data Lebanon, TN 6/18/19 No Data Acquisition
(Cribb, Greene & Cope)
Community newspapers Link
Mittera Group No Data Des Moines, IA Sprint Denver No Data Denver, CO 6/12/19 No Data Acquisition Commercial printing Link
Apollo Global Management No Data New York, NY Shutterfly $2,090 Redwood City, CA 6/10/19 $2,700 Acquisition
(Morgan Stanley)
Photobooks & prints Link
Apollo Global Management No Data New York, NY Snapfish No Data San Francisco, CA 6/10/19 No Data Acquisition Photobooks & prints Link
Penguin Random House
(Div. Bertelsmann)
$1,800 New York, NY F+W Books
(Div. F+W Media)
$22.0 New York, NY 6/7/19 $5.6 363 Sale in Ch. 11 Specialty publishing Link
Elliott Management No Data New York, NY Barnes & Noble $3,550 New York, NY 6/7/19 $683.0 Acquisition Book retailer Link
Heidelberg $2,825 Heidelberg, Germany Crispy Mountain No Data Mainz, Germany 6/5/19 No Data Acquisition MIS system for printing Link
Fortis Solutions Group
(Port co. Main Post Partners)
No Data Virginia Beach, VA Label Technology No Data Merced, CA 6/3/19 No Data Acquisition Labels & flexible packaging Link
Modacentric
(Port co. Merchant Capital)
No Data Rolling Meadows, IL Modagrafics No Data Rolling Meadows, IL 6/3/19 No Data Acquisition Fleet, POP, & OEM graphics Link


2019 June - 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:
No Chapter 11 Filings Found this Month --- --- --- --- --- --- --- --- ---
Chapter 7 Filings:
Advantage Business Media, LLC 6/18/19 No Data 19-11360 Rockaway, NY 3rd Delaware Brendan Linehan Shannon Shannon Dougherty Humiston  Trade magazine publishing
MJS Printing, Inc. 6/6/19 No Data 19-11878 New York, NY 2nd Southern NY
New York
James L. Garrity Allan R. Bloomfield Commercial printing


2019 June - 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
Amsterdam paper mill 9/24/19 No Data Amsterdam, NY WestRock Norcross, GA Jun-19 Corrugated packaging Link
Web Graphics printing plant 9/27/19 No Data Queensbury, NY Amsterdam Printing & Litho Amsterdam, NY Jun-19 Business forms & stationery printing Link
Colortree Group 6/3/19 $57.0 Richmond, VA N/A None 6/3/19 Direct mail & envelope printing Link

Friday, June 7, 2019

Sports Illustrated Print Edition Heads to Hospice – May 2019 M&A Activity


Meredith, the publishing company that is slowly dismantling the portfolio of iconic Time-Life magazine titles that it acquired in 2018, has sold Sports Illustrated to Authentic Brands Group (“ABG”). Well, kinda.


The press release announcing the sale of Sports Illustrated begins with the somewhat obtuse statement that “Global Brand Owner Purchases a Sports Media Icon and Forges a Strategic Partnership with Meredith Corporation to Build a Global Platform Converging Sports, Culture and Entertainment.” My BS antenna went up with that description of the deal as a “Strategic Partnership,” since in my world of M&A transactions this euphemism is often code for something other than a real sale. Digging deeper into the details reveals that what the branding company really acquired was the intellectual property of the Sports Illustrated brands, including two million photos and the rights to use and sell licensed uses of the names Sportsperson of the Year, Sports Illustrated Kids, Sports Illustrated TV, and of course, the famous Sports Illustrated Swimsuit.

What ABG did not buy for its $110 million purchase price was the obligation to continue publishing the magazine. Meredith was apparently unable to find a buyer that would assume the legacy responsibilities of producing insightful editorial content, obtaining stunning photographs, and in general being bogged down in the nitty gritty world of publishing. In an odd twist, Meredith has agreed to operate the Sports Illustrated printed magazine and the accompanying website for at least two years. Odder yet, Meredith will pay ABG a licensing fee for the use of the Sports Illustrated brand, the brand it just sold.

As the owner of brands and licensing rights ranging from fashion (Jones New York, Juicy Couture, Hickey Freeman, Aeropostale), to sports stars (Shaquille O’Neal, Julius Irving, Greg Norman, Muhammed Ali), to entertainers (Elvis, Marilyn Monroe), ABG is described as “unencumbered” by physical assets.” The strategy with the Sports Illustrated brand will reportedly follow the same playbook; ABG will seek to have the Sport Illustrated brand placed on consumer goods, athletic equipment, video games and sports gambling. The brand will be shopped as a vehicle to promote live events, conferences, and sports camps. ABG will also mine the royalty rights for licensees to use any of the 60-plus years of photos and magazine cover images.

Subsequent to the purchase of Time-Life, the Sports Illustrated team has been kept separate in anticipation of a sale, however Meredith has now announced that it will be integrating the Sports Illustrated editorial and production functions into its normal operations alongside its other publications. With the clock running on the two-year commitment to keep publishing the magazine, it remains to be seen if this once-great chronicler of American sports culture will remain a vibrant and financially viable print publication while its name and images are positioned as a lifestyle brand.

Packaging

Welch Packaging, a privately-owned roll-up that has maintained a laser-like focus on its acquisition strategy within the corrugated box and retail display segments, is back on our deal log with another transaction squarely in its playbook, acquiring Heritage Packaging. The purchased company is in Lincoln, Illinois and produces corrugated cartons and retail displays. Welch is the poster child of a company that is executing on a highly defined growth by acquisition strategy and not straying from its core competency. Welch has completed an acquisition every year for 20 years. Starting with five employees, the company now has over 14 locations and in excess of a thousand employees. The company has also maintained a decidedly Midwestern flavor from its base in Indiana, acquiring companies in Ohio, Illinois, Michigan, Tennessee, Indiana, and Kentucky.

New-Indy Container Board, a joint-venture company formed in 2012 with backing from two family offices with deep roots in the paper and packaging industries, announced the acquisition of Proactive Packaging & Display. Located in Ontario, California, the acquired company produces corrugated retail displays utilizing flexographic and digital printing technologies. New-Indy is building out a multi-state company focused on making brown paper materials from recycled feedstocks. The addition of Proactive to New-Indy suggests the beginning of a vertical integration strategy, as some of the company’s brown paper stocks will now be utilized within the corporate family. Some of that brown paper will likely come from the Catawba, South Carolina paper and pulp mill that New-Indy acquired in October 2018. As we expected, New-Indy reportedly is planning to convert the paper machine in Catawba that has been producing fine printing grades to brown kraft linerboard grades, placing further pricing pressure on the paper grades used in commercial printing (See The Target Report: A Reversal of Fortune: Paper Mills Gain Leverage).

WestRock, the global packaging behemoth formed in 2015 when RockTenn acquired MeadWestvaco, was active again in May with the acquisition of UBS Printing Group in Corona, California. The acquired company will become part of WestRock’s Multi Packaging Solutions business, the PE-backed roll-up in the high-end folding carton business acquired by WestRock in 2017 (See The Target Report: WestRock Affirms Commitment to Paper). UBS Printing produces folding cartons, rigid setup boxes, retail displays and commercial printing products on a fleet of offset presses.

LBP Manufacturing, a portfolio company of Pritzker Private Capital, has announced the acquisition of Union Packaging. LBP, with facilities in the US, Poland and China, produces paper-based products such as sleeves for hot drinks, drink carriers, clamshell packaging for fast food, and similar products that primarily serve the food and beverage industries. The acquired company, a minority-owned enterprise, is located in the Philadelphia metro region and produces similar paper-based food carriers such as open-top French fry cups, burger clamshells, and pizza slice carriers.


Commercial Printing and Convergence of Diversified Services


Canfield & Tack, a commercial printing company in Rochester, New York, is absorbing the business of fellow Rochester-based printer Cohber Press. Canfield & Tack, the larger of the two companies, with approximately $15 million in revenue, has been operating out of two facilities. Cohber Press, with sales of approximately $9.5 million, has a larger and more efficient facility that has been underutilized. Canfield & Tack will be the surviving corporate entity, and even though it’s the larger company, it will be pulling up stakes and moving into the Cohber plant; a classic “reverse tuck-in” transaction. Canfield & Tack is a 100% ESOP-owned company and will be welcoming the Cohber staff members as new employee-owners of the merged operations. 

Corporate Document Solutions (“CDS”), a Cincinnati, Ohio based digital printing and managed print services company, announced the acquisition of Alliance Printing & Publishing. The acquired company brings with it not only additional revenues for CDS, but also traditional 40” offset printing, extensive bindery capabilities and in-house mailing services. Established in 1992, CDS is focused on serving the regional corporate market and is a 100% woman-owned company.

Talient Action Group, a digital and offset printing company in Manchester, New Hampshire, has acquired nearby Ben Franklin Printers. The acquiring company also owns a digital advertising agency and has been a serial acquirer to fuel its growth. This latest transaction comes two years after Talient absorbed the business of Proofing House Press in Salem, New Hampshire.*

Another serial acquirer, Alcom Printing Group, based in Harleysville, Pennsylvania has put another acquisition on its score board, picking up Payne Printery in Dallas, Pennsylvania. With the acquired company located almost 100 miles from Alcom’s headquarters and main production facility, Alcom has announced that it will maintain a local office in Dallas for sales, customer services, estimating and prepress to maintain the regional presence and service. This trend to establish customer-facing “spokes” at acquired locations is a trend we see and expect to grow as companies with stronger, highly efficient production facilities consolidate regional printing capacity through repetitive acquisition strategies.


* Graphic Arts Advisors, publisher of The Target Report, served as exclusive advisors to Proofing House Press in this transaction.

2019 May - 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
Release
LBP Manufacturing
(Port co. Pritzker Private Capital)
No Data Cicero, IL Union Packaging No Data Yeadon, PA 5/31/19 No Data Acquisition Folding cartons Link
Smart Source No Data Atlanta, GA Print distribution business
(Div. MPX)
No Data Portland, ME 5/29/19 No Data Acquisition Print distributor Link
Authentic Brands Group
(Port co. Leonard Green & Partners)
No Data New York, NY Sports Illustrated Brand
(Prop. Meredith)
No Data
($3,170)
Des Moines, IA 5/27/19 $110.0 Acquisition Publishing assets Link
CCL Industries $5,270 Toronto, ON Colle a Moi $1.3 Quebec City, QC 5/23/19 $3.0 Acquisition Personalized labels Link
MediaNews Group
(Port co. Alden Global Capital)
No Data Denver, CO Reading Eagle Company $28.0 Reading, PA 5/22/19 $5.0 363 Sale in Ch. 11 Community newspaper Link
Sonoco $5,440 Hartsville, SC Corenso Holdings America No Data Wisconsin Rapids, WI 5/21/19 No Data Acquisition Recycled paperboard & cores Link
Talient Action Group No Data Manchester, NH Ben Franklin Printers No Data Hooksett, NH 5/20/19 No Data Acquisition Commercial printing Link
Forum Communications No Data Fargo, ND Rochester Post Bulletin
(Prop Small Newspaper Group)
No Data Rochester, MN 5/16/19 No Data Acquisition
(Dirks, Van Essen)
Regional newspaper Link
Canfield & Tack $14.9 Rochester, NY Cohber Press $9.4 Rochester, NY 5/16/19 No Data Acquisition Commercial printing Link
Premier Marketing Group
(Div. Grossman Marketing)
No Data Manchester, ME Suncoast Print Solutions No Data Sarasota, FL 5/15/19 No Data Acquisition Print distributor Link
Brixey & Meyer Capital No Data Dayton, OH Patriot Converting No Data Elk River, MN 5/14/19 No Data Acquisition Paper converting Link
Welch Packaging Group No Data Elkhart, IN Heritage Packaging No Data Lincoln, IL 5/14/19 No Data Acquisition Corrugated boxes Link
View Newspaper Group No Data Lapeer, MI Daily News No Data Greenville, MI 5/13/19 No Data Acquisition Community newspaper Link
Michigan Web Press No Data Lapeer, MI Stafford Printing No Data Greenville, MI 5/13/19 No Data Acquisition Newspaper printing Link
New-Indy Containerboard No Data Ontario, CA Proactive Packaging
(Port co. CK Pearl Fund)
No Data Ontario, CA 5/9/19 No Data Acquisition
(Mesirow)
Corrugated retail displays Link
Corporate Document Solutions No Data Cincinnati, OH Alliance Printing & Publishing No Data Middletown, OH 5/7/19 No Data Acquisition Commercial printing Link
Sign-Zone
(Port co. Pfingsten Partners)
No Data Brooklyn Center, MN Promic No Data Nederweert,
Netherlands
5/7/19 No Data Acquisition Promotional displays Link
Alcom Printing Group No Data Harleysville, PA Payne Printery No Data Dallas, PA 5/3/19 No Data Acquisition Commercial printing Link
Southwest Business Products  No Data Toronto, ON Binders & Index Tax Business
(Div DCM)
$234.0 Brampton, ON 5/3/19 No Data Acquisition Specialty printed products Link
Electronics for Imaging (EFI) $1,020 Foster City, CA Boya Kimya No Data Bursa, Turkey 5/2/19 No Data Acquisition Inkjet textile inks Link
WestRock $17,320 Norcross, GA UBS Printing Group No Data Corona, CA 5/2/19 No Data Acquisition Folding cartons Link
New Orleans Advocate No Data New Orleans, LA Times-Picayune
(Prop Advance Local Media)
No Data New Orleans, LA 5/2/19 No Data Acquisition Metro newspaper Link
Virtual Systems
(Rebranded as Print Reach)
No Data Jacksonville, FL PagePath Technologies No Data Plano, IL 5/1/19 No Data Merger MIS system for printing Link
C.J. Graphics No Data Mississauga, ON Acme Ticket No Data Mississauga, ON 5/1/19 No Data Acquisition Ticket printing Link


2019 May - 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:
American Printing Company, Inc.  5/3/19 No Data 19-01844 Birmingham, AL 11th Northern AL Tamara O. Mitchell Bill D. Bensinger  Commercial printing
Chapter 7 Filings:
Independent Printing Co., Inc. 5/30/19 No Data 19-17330 Glen Burnie, MD 4th Baltimore David E. Rice Raymond E. DiBiagio, Jr. Commercial printing
Appleby Services, Inc.
dba Center Printing Co.
5/24/19 No Data 19-04923 Sarasota, FL 11th Middle FL Roberta A. Colton  James D. Jackman  Commercial printing


2019 May - 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
Luke paper mill Jun-19 No Data Luke, MD Verso Paper Memphis, TN Apr-19 Coated printing paper grades Link
Transcontinental - Printing facility 12/31/19 No Data Brampton, ON Transcontinental Montreal, QC 5/8/19 Consolidation of retail print operations Link
Thomson-Shore May-19 $28.0 Dexter, MI CJK Group Brainerd, MN 5/11/19 Consolidation of book printing operations Link
Performance POP 7/10/19 No Data Dallas, TX None N/A May-19 Wide format, retail display Link
Shelton-Turnbill 7/11/19 No Data Eugene, OR None N/A May-19 Commercial printing Link
Pacific Coast Graphics 8/7/19 No Data Whittier, CA None N/A May-19 Commercial printing Link
North American Communications 5/20/19 No Data Duncansville, PA None N/A 5/20/19 Direct mail  Link