Saturday, April 6, 2019

CJK Group Opens Next Chapter with Loan-to-Own Strategy – March 2019 M&A Activity


The news broke on March 25th that boutique book printing and manufacturing company Thomson-Shore had filed that day for protection under Chapter 11 of the US Bankruptcy Code. It quickly became apparent that this was not going to be a free-fall bankruptcy in which the company hobbles on for months or years, haggling with creditors to put together a plan to trim debt, reorganize the company and emerge from bankruptcy with a cleaned-up balance sheet. Instead, the game plan called for a quick sale of assets under the supervision of the Bankruptcy Court, the dismissal of all the employees followed by an immediate resumption of operations, albeit limited, under the management of a new owner.

In a well-coordinated sequence of filings in the Bankruptcy Court, Thomson-Shore revealed that a sale of essentially all of its assets was already well under way with a preferred buyer. In what’s known as a “363 Sale” (based on the section of the U.S. Bankruptcy Code that permits the sale of assets free-and-clear of past claims and liens in a bankruptcy proceeding) Thomson-Shore has designated the CJK Group as its “stalking horse” bidder, the company it had selected to be in the preferred starting position in the 363 sale process. With a clear head start and advance planning, CJK is the company most likely to win the race to acquire Thomson-Shore’s assets.

Book printing industry consolidator CJK Group had solidified its position in advance of the bankruptcy filing by lending $760,000 to Thomson-Shore on March 1st as a pre-petition secured loan. That loan likely extended the life of Thomson-Shore and afforded CJK the time needed to develop a solid plan to buy the company on its own terms. To further support the company as it works though the bankruptcy process, CJK also provided $500,000 of DIP financing to Thomson-Shore within days of the bankruptcy filing (DIP stands for Debtor-in-Possession; a DIP loan is a form of financing afforded administrative superpriority over other claims in bankruptcy). As a secured lender and now also the DIP lender, CJK is in the position to include the face value of its secured loans as a “credit bid” included in the final price paid for the Thomson-Shore assets. In other words, CJK has already made a significant down payment towards its plan to purchase the Michigan book printer.

The only hiccup for CJK might be that a bidder emerges to top the $8.25 million price tag spelled out in the court filings and that a bidding war develops. The bidding procedures approved by the bankruptcy court require each bid to exceed the prior highest price in increments of $100K, which could quickly escalate the final price. In the event that CJK gets outbid, at least it will walk away with payment of its secured loans plus a $265K breakup fee that is in addition to the price paid for Thomson-Shore, small consolation for the risk taken and work invested, and a possible deterrent to other bidders.

With the deadline for competing bids set for the end of April, the Bankruptcy Court is scheduled to enter a final order of sale on May 1st. Let the race begin.


Commercial Printing and Convergence of Diversified Services

Salem One, a diversified printing and graphic services company in Winston-Salem, North Carolina, acquired Postmark. The purchased company, described as a “full-service direct marketing company,” clearly has its roots in the lettershop business, offering postal presorting, addressing, inserting and data hygiene services, with a smattering of upstream design and marketing services.

Envision3, a commercial printing company in the Chicagoland region with its roots firmly planted in offset printing, has continued to diversify with the acquisition of Direct Mail Solutions.* Envision3 offered mailing services before acquiring DMS, however, the acquisition provided the company with additional staff with extensive experience in mailing, as well as a customer base with a need for mailing services.

IBS Direct, a direct mail printer located in King of Prussia,† Pennsylvania, announced its merger with ClientLink, a mailing services and fulfillment provider also based in the suburbs of Philadelphia. The two companies are both recent acquisitions of Logan Marketing Group and are currently being rebranded under the moniker “Intellus.”

These acquisitions, as well as other similar deals, reflect a growing industry trend toward firms providing a full roster of services rather than focusing on one or two capabilities. As more and more printers add mailing services, and mailing service providers add digital printing capabilities, a convergence is occurring. We expect this trend to continue.

Commercial Printing and Consolidation

Consolidation within the generalized commercial printing industry continued unabated. John Roberts Company, a diversified graphics services company in Minneapolis offering web and sheetfed printing, as well as mailing and fulfillment services, made a geographic leap with the acquisition of the assets of HM Graphics in Milwaukee. The buyer announced plans to keep the acquired facility operating, retaining many of the employees. With the acquisition, the John Roberts Company transitions to become a multi-plant player with the bonus addition of significant wide format printing expertise.

Two companies in the San Diego metro area came together as Golden State Graphics merged into Zuza, the commercial printing and mailing services company formerly known as CPS Printing. In addition to printing, Zuza offers mailing and marketing support services.

Publicly traded printing company Ennis, with a highly diverse product offering sold exclusively through distributor channels, acquired Integrated Print & Graphics, based in South Elgin, Illinois.‡ The acquired company shares corporate DNA with Ennis, as both companies were originally established as manufacturers of business forms sold through independent distributors.


* Graphic Arts Advisors, publisher of The Target Report, served as exclusive advisors to Direct Mail Solutions in this transaction.
†Graphic Arts Advisors, publisher of The Target Report, served as exclusive advisors to CL Graphics, one of the companies that was acquired by and is now part of Integrated Print & Graphics.
‡Graphic Arts Advisors, publisher of The Target Report, served as exclusive advisors to Maestro Media Print Solutions, one of the companies that was acquired by and is now part of IBS Direct.


2019 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
Release
CJK Group No Data Brainerd, MN Thomson-Shore $28.0 Dexter, MI 3/27/19 $8.3 363 Sale in Ch. 11 Book manufacturing Link
Envision3 No Data Bloomingdale, IL Direct Mail Solutions No Data Carol Stream, IL 3/25/19 No Data Acquisition
(Graphic Arts Advisors)
Mailing services Link
St. Joseph's Communications No Data Ontario, QC Consumer magazines (5 titles)
(Prop. Rogers Media)
No Data Toronto, QC 3/20/19 No Data Acquisition Magazine publishing Link
IBS Direct
(Rebranded as Intellus)
No Data King of Prussia, PA ClientLink No Data Montgomeryville, PA 3/20/19 No Data Merger Direct mail & fulfillment Link
Progressive Converting No Data Appleton, WI Northwoods Paper Converting No Data Beaver Dam, WI 3/17/19 No Data Acquisition Paper converting Link
Ennis $287.2 Midlothian, TX  Integrated Print & Graphics $20.0 South Elgin, IL 3/15/19 No Data Acquisition Commercial printing Link
C-P Flexible Packaging
(Port co. First Atlantic Capital)
No Data York, PA Flexo Transparent
(Port co. Oriz / Sidereal)
No Data Buffalo, NY 3/14/19 No Data Acquisition Flexible packaging Link
LightBay Capital and
Freeman Spogli & Co.
No Data Los Angeles, CA Fastsigns International No Data Carrollton, TX 3/13/19 No Data Acquisition
(North Point Advisors)
Signage franchisor Link
WestRock $16,720 Norcross, GA Linkx Packaging No Data Beccles, UK 3/8/19 No Data Acquisition Custom box machinery Link
Salem One No Data Winston-Salem, NC Postmark No Data Winston-Salem, NC 3/8/19 No Data Acquisition Mailing services Link
John Roberts Company $49.0 Minneapolis, MN HM Graphics $17.0 Milwaukee, WI 3/8/19 No Data Asset acquisition Commercial printing Link
Zuza No Data Carlsbad, CA Golden State Graphics No Data San Marcos, CA 3/8/19 No Data Merger Commercial printing Link
Golden West Packaging Group
(Port co. Lindsay Goldberg)
No Data Sacramento, CA Allpack Container No Data Renton, WA 3/7/19 No Data Acquisition Retail display & packaging Link
Opus Packaging No Data Caledonia, MI Wabash Container No Data Mount Carmel, IL 3/7/19 No Data Acquisition Corrugated boxes Link
Tension Corporation No Data Kansas City, MO Motion Envelope No Data Dallas, TX 3/6/19 No Data Acquisition Envelope manufacturing Link
The Berkshire Eagle
(Div. Birdland Acquisition)
No Data Pittsfield, MA Southern Berkshire Shopper No Data Great Barrington, MA 3/4/19 No Data Acquisition Community ad publication Link
Transcendia No Data Franklin Park, IL Purestat No Data Lewiston, ME 3/1/19 No Data Acquisition Specialty ESD packaging Link


2019 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:
Thomson-Shore, Inc. 3/25/19 No Data 19-44343 Dexter, MI Eastern MI
Detroit
Thomas J. Tucker Scott Kwiatkowski  Book manufacturing
Reading Eagle Company 3/20/19 $28.0 19-11728 Reading, PA Eastern PA
Reading
Richard E. Fehling Evan Beck Coren Newspaper publisher
Peeq Media LLC 3/19/19 No Data 19-41555 Alexandria, VA
(Long Island City, NY)
2nd Eastern NY
Brooklyn
Carla E. Craig Dawn Kirby  Commercial & retail graphics
F+W Media 3/10/19 $67.7 19-11728 New York, NY Delaware
Wilmington
Kevin Gross Kenneth J. Enos  Specialty publishing
Chapter 7 Filings:
True Color Printing Inc 3/5/19 No Data 19-12381 Los Angeles, CA 9th Central CA
Los Angeles
Sheri Bluebond Jaenam J. Coe  Printing & copying


2019 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
Advertiser Printers 4/25/19 No Data Dayton, KY None N/A Mar-19 Commercial printing Link
Graessle Mercer 4/3/19 No Data Seymour, IN None N/A Mar-19 Commercial printing Link

Thursday, March 7, 2019

Platinum Equity Likes Print – February 2019 M&A Activity


In its latest foray into the print-related industries, Platinum Equity, one of the world’s largest private equity firms, announced the acquisition of Multi-Color Corporation in a take-private transaction. This is the latest transaction of many in which the investment firm has taken a positive position in businesses that put ink on a substrate. 

With $13 billion under management, Platinum has completed deals over the past several years in packaging, plastic cards, mail processing equipment, direct mail marketing programs, and pressure-sensitive papers, among others. The folks at Platinum who are charged with making smart investments have clearly decided that there are opportunities across the broad spectrum of companies that operate in print-related activities.

Platinum announced that it plans to combine Multi-Color with WS Packaging, the label and packaging company it acquired one year ago in February 2018 from private equity firm J.W. Childs. With Platinum Equity’s back-to-back acquisitions of these different, but highly complementary companies, the result will be a global producer of label technologies, including pressure sensitive, cut and stack, wraps, aluminum, in-mold, shrink sleeve, heat transfer, RFID and NFC, as well as flexible packaging and folding cartons. The combined company will compete in the increasingly global business of packaging and will have production facilities across the world: Multi-Color adds 71 plants in 26 countries to the 17 locations WS Packaging operates across the US.

A Roll-up of Roll-ups

Multi-Color, headquartered in Cincinnati, Ohio, is the result of a focused and steady drumbeat of acquisitions in the label printing segment, most significantly demonstrated with the acquisition of the label division of Vienna, Austria-based Constantia Flexibles. That transaction not only positioned Multi-Color for the eventual sale to Platinum, it was also afforded Constantia a “second bite of the apple” since it became a 28.7% shareholder of Multi-Color in that deal. Accordingly, Constantia will reap the benefits of Platinum’s purchase: a 32% bump over Multi-Color’s recent publicly traded share price.



WS Packaging, based in Green Bay, Wisconsin, was much less active than Multi-Color on the acquisition front in the five years prior to its sale to Platinum in 2018. Nonetheless, WS was also the result of a strategic roll-up of printing companies that focused on providing labels and related packaging products. The result was a powerhouse in US-based label, flexible packaging and folding cartons.



Investing in Print

Platinum has put its capital to work in print in more ways than just packaging. Over the past several years, the fund has consistently been willing to invest in the future of print in mature printing industry segments. The purchase of Pitney Bowes’ Document Messaging Technologies division, the maker of inserters, printers, sorters and related software was a vote of confidence in direct mail. The acquisition of PLI Card Marketing Solutions and subsequent bolt-on of Harvard Card Systems, both printers of plastic cards used in loyalty and membership programs, was a vote of confidence in the perception of value one gets when holding a substantial printed item. The purchase of Valpak, the direct mail producer of those ubiquitous blue envelopes stuffed with local coupons, was a vote of confidence that recipients respond to print that arrives at their doorstep. The purchase of Jostens, publisher and printer of yearbooks, was a vote of confidence in the desire of students to remember their accomplishments with a book that will last for years. Beginning in 2014, with the acquisition of the company in Australia and New Zealand that publishes phone books, this private equity fund has voted to invest in the future of print.



Commercial Printing and Diversified Services

EP Graphics, based in Berne, Indiana, acquired the remaining business of McCormick Armstrong in Wichita, Kansas. The acquisition was disclosed shortly after McCormick Armstrong announced that it was closing down after 118 years of continuous operation. The shuttered company was a combination web and sheetfed offset printer, and also offered digital printing, mailing and fulfillment services.

Two printing companies that exclusively serve print distributors changed hands. PDF Print Communications, located in Signal Hill, California, acquired Orion Press, a forms printer in Phoenix, Arizona, and announced plans to tuck the operations of Orion into its existing operations in Phoenix. Royal Business Forms, which also sells only to the trade, was acquired in a management buyout. The Brooklyn Park, Minnesota printer specializes in forms and label printing.



2019 February - 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
EP Graphics No Data Berne, IN McCormick Armstrong No Data Wichita, KS 2/28/19 No Data Closure & Tuck-in Commercial printing Link
Platinum Equity No Data Los Angeles, CA Multi-Color Corporation $1,740 Cincinnati, OH 2/25/19 $2,500 Acquisition
(Goldman Sachs)
Label printing Link
AutoMate Label Solutions No Data Houston, TX Diverse Label Printing No Data Burlington, NC 2/18/19 No Data 363 Sale in Ch. 11 Label printing Link
PDF Print Communications No Data Signal Hill, CA Orion Press No Data Phoenix, AZ 2/12/19 No Data Acquisition
(Corp Dev Assoc)
Forms printing Link
Greif $3,870 Delaware, OH Caraustar Industries
(Port co. H.I.G. Capital)
No Data Austell, GA 2/11/19 No Data Acquisition Recycled paperboard mfg. Link
ComGraphics ESOP No Data Chicago, IL ComGraphics No Data Chicago, IL 2/9/19 No Data Sale to ESOP
(Prairie Capital)
Transactional printing Link
Royal Business Forms Mngt No Data Brooklyn Park, MN Royal Business Forms No Data Brooklyn Park, MN 2/5/19 No Data Mngt. Buyout Forms & label printing Link
PPC Flexible Packaging
(Port co Morgan Stanley Capital)
No Data Buffalo Grove, IL HFM Packaging No Data Pewaukee, WI 2/5/19 No Data Acquisition
(TKO Miller)
Flexible Packaging Link


2019 February - 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:
Print Plus Corporation 2/15/19 No Data 19-00797 Ponce, PR 1st Puerto Rico
Ponce
Edward A Godoy Noemi
Landrau Rivera
Printing & copying
CityView Publishing, LLC 2/9/19 No Data 19-00586 Wilson, NC 4th Eastern NC
Raleigh
David M. Warren  John G. Rhyne  Magazine publishing
Chapter 7 Filings:
Lingraph Packaging Services Company 2/15/19 No Data 19-04113 Glendale Heights, IL 7th Northern IL
Chicago
Janet S. Baer Joshua D. Greene  Commercial printing


2019 February - 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
Bertek  Label & Card Solutions 2/25/29 No Data Milton, VT Identification Multi Solutions Montreal, QC 2/25/29 Label and card printing Link
Turley Publications 4/1/19 No Data Palmer, MA None N/A Feb-19 Community newspapers & commercial print Link
McCormick Armstrong 2/21/19 $11.5 Wichita, KS None N/A 2/21/19 Commercial printing Link