Thursday, July 7, 2016

Dotcom Survivor Retains Print – June 2016 M&A Activity


It’s a long way from the year 2000 when AOL famously bought Time Warner, then the largest media and entertainment company in the world, and also the publisher of many printed titles. The widely-touted and lauded logic behind the deal was that the new delivery channel called the “Internet” badly needed the rich content of old-media stalwarts like Time, Warner Music, CNN, HBO and others. With sky-high valuations that Internet companies enjoyed at the time (now derided as the “dotcom bubble”), AOL emerged as the dominant player in the deal with Time Warner. AOL shareholders received a greater percentage of shares in the combined company. AOL’s founder Steve Chase landed the top spot as Chairman of the merged company.

Now often referred to as the worst merger of all time, the AOL Time Warner deal led to a loss a year later of over $99 billion and decline in market value of more than $200 billion. The bubble had burst, and the merged company soon thereafter dropped “AOL” from its name.

How things have changed. The Internet has grown up, and with the advent of the smart phone, online and mobile now clearly are, or are becoming, the dominant distribution channels for content of every stripe. CarsDirect.com, one of the truly early Internet startups, not only survived the bubble, but has now morphed into a full-fledged online company. Serving automotive, health, home and travel, legal and specialized product verticals, the company has been renamed Internet Brands and now has dozens of highly focused websites with over 100 million monthly visitors.

With backing from PE mega-fund KKR, Internet Brands recently acquired Fodor’s from publishing giant Penguin Random House. Along the way, Internet Brands has acquired other publishers that distribute content via print as well as through its online channels. The company now even promotes print production expertise as one of its core skill sets. Acknowledging the value of print to travel enthusiasts, Internet Brands has announced that it will continue to publish Fodor’s famous travel guides in printed format, of which there are currently more than 150 active titles in print. In a back-to-the-future time warp, it turns out that Internet companies really do still need to acquire good content and that some that content is best delivered via print. In this year-2016 transaction the Internet-centric company is clearly in the driver’s seat.

And what happened to Time Warner? The synergy between print, broadcast and electronic delivery never really materialized, at least not for the combined AOL Time Warner. In 2009, the company spun off its cable division and dumped AOL. The remaining company focused on its print and traditional media businesses. Printed publications continued to face the headwinds of content distributed via the Internet and mobile, and in 2014 Time Warner spun off its printed publications as a separate company, Time Inc. (see The Target Report – June 2014).

Packaging

Canadian publishing and printing powerhouse Transcontinental is now well on its way to establishing itself as a force in the US flexible packaging market with its third flexible packaging acquisition in two years, acquiring Robbie Manufacturing in Lenexa, Kansas. Transcontinental saw that demand for its traditional products was declining and began to build its new division with the acquisition of Capri Packaging in 2014 (see The Target Report – March 2014). Transcontinental was not previously in the flexible packaging business, but noted at that time that as a company it had deep understanding of roll-fed printing processes and believed that flexible packaging printing processes would share many of the same underlying issues and production methodologies. In 2015, the company acquired Brooklyn, New York-based Ultra Flex Packaging, reportedly paying 6.7x EBITDA of $12 million, more than one times revenue of $72 million. (see The Target Report – September 2015).

Nippon Paper Industries, of Tokyo, Japan, announced the acquisition of the paper container operations of Weyerhaeuser, the second divestiture in as many months for Weyerhaeuser. The jettisoned division, which was sold for $285 million, includes a paper mill in Washington State that specializes in liquid-packaging paperboard used in paper cups and cartons for milk, juice and other liquids. Last month, Weyerhaeuser sold its pulp processing business to International Paper, and also announced that it is conducting a strategic review of its joint venture with Nippon Paper that produces printing papers. Weyerhaeuser is now focused on timber, land and forest products and appears to be exiting the paper business.

Georgia-Pacific, a division of privately-held Koch Industries, acquired Reliable Container in Southern California and Tijuana, Mexico. Reliable manufactures corrugated boxes and retail displays. This is the second acquisition this year that Georgia-Pacific has announced in the corrugated box and retail display segment, buying Illinois-based Excel Displays & Packaging in March. The two acquired companies are right square in the middle of two trends in printing where valuations have been trending to the higher end of the range for printing-related companies, packaging and retail display (See The Target Report – January 2016).

Commercial Printing - Diversified Services

Phoenix Color, now a division of ALJ Regional Holdings, having been spun off from Visant in 2015 (See The Target Report – July 2015), has now acquired cosmetic printing specialist Color Optics located in Rockaway, NJ. The seller of Color Optics was Arcade Beauty, a cosmetic sampling company which, as part of the deal, will remain as a customer for the new owners.

Kelmscott Communications, Rider Dickerson and Buhl Press, all located in Illinois, announced the formation of Fuse in a three-way merger. Together the companies will have $40 million in revenues, but will operate separately for the time being. The plan is to eventually fold all three into the Buhl location which will be expanded to accommodate the combined companies.

Imagine!, the retail display printing company in Minneapolis which recently was purchased by PE firm Oak Hill Capital Partners, announced its first acquisition under the new management, acquiring creative agency Midnight Oil in Burbank, California.

Digital Textile Printing

Epson strengthened its position in digital inkjet printers for textiles with the acquisition of Italian manufacturer Robustelli which has used Epson inkjet printheads in its Monna Lisa series of textile printers. This acquisition comes a year after Epson acquired For.Tex, also an Italian company, that develops and produces inks especially for printing textiles.

Epson is playing catch-up with EFI, which has been an aggressive acquirer in the digital textile printing space. EFI acquired Optitex, an Israeli company that has developed design software for textile designers that provides fully rotational 3D viewing and editing of virtual prototype fashion designs. Earlier this year, EFI acquired Rialco, a supplier of dye sublimation powders used in textile printing, and in June of 2015, EFI acquired Reggiani Macchine, a manufacturer industrial-strength inkjet printers used to print textiles. (See The Target Report – July 2015).



2016 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
Releases
Transcontinental $1,558 Montreal, QC Robbie Manufacturing $50.0 Lenexa, KS 6/30/16 No Data Acquisition Flexible packaging & films Link
Imagine!
(Port co. Oak Hill Capital)
$303 Minneapolis, MN Midnight Oil No Data Burbank, CA 6/27/16 No Data Acquisition
(New Direction)
Creative agency Link
Forum Communications No Data Fargo, ND Scuttlebutt Magazine
(Bromeland Publishing)
No Data Blue Earth, MN 6/24/16 No Data Acquisition Boating publication Link
Epson $10,600 Tokyo, Japan Robustelli $13.4 Villa Guardia, Italy 6/23/16 No Data Acquisition Digital inkjet textile printers Link
Phoenix Color
(Div. ALJ Regional Holdings)
No Data Hagerstown, MD Color Optics
(Div. Arcade Marketing)
No Data Rockaway, NJ 6/22/16 $7.0 Acquisition Commercial printing Link
OpenText $1,830 Waterloo, ON HP - CCM Software $110.0
($100,350)
Palo Alto, CA 6/21/16 $315.0 Asset Acquisition Content mngt. software Link
Internet Brands No Data El Segundo, CA Fodor's
(Div. Penguin Random House)
No Data New York, NY 6/21/16 No Data Acquisition Specialty publications Link
Kao $14,340 Tokyo, Japan Collins Inkjet No Data Cincinnati, OH 6/20/16 No Data Acquisition Inks for inkjet printing Link
Forum Communications No Data Fargo, ND Helmer Publications No Data Beldenville, WI 6/20/16 No Data Acquisition Local newspapers & shoppers Link
Electronics for Imaging (EFI) $922.1 Foster City, CA Optitex No Data Petach-Tikva, Israel 6/16/16 $52.8 Acquisition Design software for textiles Link
Nippon Paper Industries $9,825 Tokyo, Japan Paper container operations
(Div. Weyerhaeuser)
$362.0
($7,180)
Federal Way, WA 6/15/16 $285.0 Acquisition Specialty cartons for liquids Link
Broadridge Financial Solutions $2,850 Lake Success, NY NACC
(Div. DST Systems)
$1,100
($2,870)
Kansas City, MO 6/14/16 $410.0 Acquisition Transactional printing Link
Fuse No Data Berkeley, IL Buhl Press No Data Berkeley, IL 6/14/16 No Data 3-way merger Commercial printing
(Combined $40Mil revenue)
Link
Fuse No Data Berkeley, IL Kelmscott Communications No Data Aurora, IL 6/14/16 No Data 3-way merger Commercial printing
(Combined $40Mil revenue)
Link
Fuse No Data Berkeley, IL Rider Dickerson No Data Bellwood, IL 6/14/16 No Data 3-way merger Commercial printing
(Combined $40Mil revenue)
Link
Georgia-Pacific
(Div. Koch Industries)
No Data Atlanta, GA Reliable Container No Data Santa Fe Springs, CA 6/9/16 No Data Acquisition
(Mesirow)
Corrugated cartons & display Link


2016 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:
TJ Sign Solutions Inc 6/17/16 No Data 16-60862 Binghamton, NY 2nd Northern NY
Binghamton
Diane Davis Peter Alan Orville Retail signage and graphics
Suncoast LED Displays, LLC 6/13/16 No Data 16-05408 Clearwater, FL 11th Middle FL
Tampa
Catherine Peek McEwen Steven M. Fishman Electronic signage
No Chapter 7 Filings Found this Month --- --- --- --- --- --- --- --- ---


2016 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
Pacemaker Press 6/23/16 No Data Waynesboro, PA None N/A 6/14/16 Direct mail printing Link
Miami Valley Publishing 8/17/16 No Data Fairborn, OH None N/A Jun-16 Retail insert printing Link
Artco Offset 8/10/16 No Data Canton, MA None N/A Jun-16 Commercial printing Link
Independent Printing Company 7/28/16 No Data Ashland, OR None N/A Jun-16 Commercial printing Link
Market Street Press 6/30/16 No Data Aberdeen, NC None N/A Jun-16 Promotional items Link
Castlerock Printing 6/9/16 No Data Port Washington, NY None N/A Jun-16 Printing & copying Link

Tuesday, June 7, 2016

Sticky Discipline for the Label Business – May 2016 M&A Activity


CCL Industries has proven to be an adept and disciplined serial acquirer of relatively small bolt-on transactions for its label and Avery divisions. The company announced another acquisition in the label printing segment, acquiring Eukerdruck and Pharma Druck, two German companies with common ownership. The acquired companies produce inserts, booklets and pressure sensitive labels for pharmaceutical companies in German-speaking Europe. The transaction valued the acquired companies and related real estate at $31 million including assumed debt. The reported sales of the combined companies were $40 million with a respectable 14.0% adjusted EBITDA of $5.6 million. CCL paid the sellers a multiple of 5.54 times adjusted EBITDA, absolutely consistent with the pricing range CCL has established for its acquisitions in the label segment. 

CCL appears to be strategically focused on establishing beachheads internationally, no matter that many of these transactions are rather small relative to CCL’s $3 billion in annual revenue; most representing less than 1% in additional revenue. Notably, in addition to maintaining deal discipline in these smaller deals, CCL paid a still moderate, at least in terms of current market multiples for larger enterprise-level transactions, 6.7 times EBITDA when acquiring Checkpoint Systems this past March. That acquisition establishes an entirely new division within CCL Industries, bringing apparel and retail labeling solutions into the mix at CCL, including “smart label” RFID labeling technologies.


Commercial Printing / Diversified Services

Pfingsten Partners, in concert with printing and paper industry veteran executive Brian Dunsirn, acquired Cleveland area Oliver Printing. Privately held and family-managed for four generations, Oliver Printing has successfully transitioned from a purely commercial printer to a company with a focus on folding cartons, including structural design, printing and finishing. As the first institutional owner of Oliver Printing, Pfingsten is positioning Oliver as its platform for additional investments and bolt-on acquisitions within the packaging industry.

At the other end of the strategic spectrum from commercial printing companies that have successfully added packaging to their services, are companies such as Strata in Plymouth Meeting, Pennsylvania that provides diverse marketing services. Strata acquired additional printing and direct mail capacity with the acquisition of Movad Corporation.

Integ, located in Waco, Texas, has used acquisition as a primary driver of its growth and evolution into a diversified marketing services provider, acquiring several mailing and printing companies along the way. It’s latest acquisition, Davis Brothers, brings with it significant sheetfed printing capacity as well as newsprint web offset presses.

Premier Press, a multi-faceted provider of high quality marketing materials located in Portland, Oregon, announced the acquisition of Ad-Mail, bringing direct mail data management and production expertise to Premier. The combined entities operate in a recently renovated 350,000 square foot facility in the Swan Island section of the city.

In yet another approach to differentiation, Rayacom Print & Design, headquartered in Edmonton, Alberta, continued its geographic diversification and acquired the assets of Generation Printing in Vancouver, British Columbia. Rayacom now has eleven locations, mostly spread across central and western Canada, with one location in Toronto to the east.

Kappa Media added to its portfolio of printing companies with another acquisition following its recent purchase last month of Vanguard Printing in Ithaca, New York (see The Target Report – April 2016 for more about Kappa and its founder). The latest addition for Kappa was the purchase of Times Printing in Random Lakes, Wisconsin. Both Vanguard and Times Printing specialize in publication printing services.

Paper

The churning goes on in the paper making industry. A group of PE funds that comprise the principal shareholders of Catalyst Paper teamed up with Kejriwal Group International, a paper and pulp processing company based in Mumbai, India, in a bid to take Catalyst Paper private. Catalyst currently owns and operates five mills in North America, producing printing papers ranging from uncoated newsprint up to the finer grade coated sheets.

Weyerhauser announced the sale of its pulp business to International Paper. The purchase brings 1,900 employees into International Paper, working at five pulp mills and two converting facilities that produce fluff pulp for use in absorptive products and textiles.

Directories

Dex Media, the successor to a long line of phone directory publishing and printing companies, failed to meet the goals set forth as it emerged from its second bankruptcy filing in 2013 ((see The Target Report – August 2012 and The Target Report – March 2013). The company and its many related entities that are the remnants from the 2013 merger between Dex One Corp (aka RH Donnelley) and SuperMedia (aka Idearc Media, nĂ© Verizon Directories) filed for Chapter 11 for the third time on May 16th. In the turnaround profession, they call that a “Chapter 33” – need we say more about the prospects for directory-based print-centric businesses that compete in the face of Google and other online search options?



2016 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
Releases
Star News Publishing No Data Wainright, AB Saskatchewan Newspapers
(Div. Transcontinental)
No Data
($1,566)
Montreal, QC 5/30/16 No Data Acquisition Local newspapers & printing Link
Koenig & Bauer (KBA) No Data Wurzburg, Germany Iberica
(Div. Cerutti Group)
No Data Barcelona, Spain 5/23/16 No Data Acquisition Diecutting equipment mfg. Link
Kejriwal Group International
(and principal shareholders)
No Data Mumbai, India Catalyst Paper $2,020 Richmond, BC 5/23/16 No Data Going-private Paper mills Link
Strata No Data Plymouth Meeting,
PA
Movad $4.0 Bensalem, PA 5/22/16 No Data Acquisition Commercial printing Link
Pfingsten Partners No Data Chicago, IL Oliver Printing No Data Twinsburg, OH 5/19/16 No Data Acquisition Commercial & carton printing Link
Spiral Binding No Data Totowa, NJ Lawrence Binding Systems No Data Rocky River, OH 5/19/16 No Data Acquisition Binding equipment & supplies Link
Flint Group $2,502 Luxembourg American Inks and Coatings No Data Pine Bluff, AR 5/17/16 No Data Acquisition Packaging inks & coatings Link
CCL Industries $3,200 Toronto, ON Eukerdruck $40.0 Marburg, Germany 5/16/16 $31.0 Acquisition Label & insert printing Link
Premier Press No Data Portland, OR Ad-Mail No Data Portland, OR 5/12/16 No Data Acquisition Direct mail services Link
Rayacom Print & Design No Data Edmonton, AB Generation Printing No Data Vancouver, BC 5/10/16 No Data Asset Acquisition Commercial printing Link
Smyth Companies No Data St. Paul, MN Flexible Container Systems No Data Pleasantville, NJ 5/10/16 No Data Acquisition Tube labeling Link
Integ No Data Waco, TX Davis Brothers  No Data Waco, TX 5/7/16 No Data Acquisition Commercial printing Link
BLUE Software
(Port co. Diversis Capital)
No Data Chicago, IL Design2Launch
(Div. Eastman Kodak)
No Data
($1,750)
Rochester, NY 5/4/16 No Data Acquisition Brand management software Link
Kappa Media No Data Fort Washington, PA Times Printing $42.0 Random Lakes, WI 5/4/16 No Data Acquisition Publication printing Link
Adobe $5,070 San Jose, CA Livefyre No Data San Francisco, CA 5/3/16 No Data Acquisition Content management Link
Tampa Bay Times No Data St. Petersburg, FL Tampa Tribune
(Port co. Revolution Capital)
No Data Tampa, FL 5/3/16 No Data Acquisition Daily newspaper Link
Evening Post Industries No Data Charleston, SC Free Times No Data Columbia, SC 5/3/16 No Data Acquisition Weekly newspaper Link
International Paper $21,960 Memphis, TN Weyerhaeuser (Pulp business) No Data
($7,180)
Federal Way, WA 5/2/16 $2,200 Acquisition Pulp processing Link


2016 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:
Apollo Press, Inc. 5/26/16 No Data 16-50717 Newport News, VA 4th Eastern VA
Norfolk
Frank J. Santoro Carolyn L. Camardo Commercial printing
Federal Identification Card Co, Inc.
(dba PTM Sport)
5/17/16 No Data 16-13496 Philadelphia, PA 3rd Eastern PA
Philadelphia
Ashely M. Chan Albert A. Ciardi, III Screen printing & promo items
Dex Media, Inc. (and affiliates)
(aka R.H. Donnelley)
5/16/16 $1,800 16-11200 Dallas, TX 3rd Delaware
Wilmington
Kevin Gross Pauline K. Morgan  Directory publishing
Chapter 7 Filings:
Sid Ink Corporation
(aka Angel Printing)
5/24/16 No Data 16-03107 Oceanside, CA 9th Southern CA
San Diego
Louise DeCarlo Adler Christopher R. Bush  Commercial Printing
Kansas City Automated Mail, Inc. 5/16/16 No Data 16-20861 Lenexa, KS 10th Kansas
Kansas City
Robert D. Berger Carl R. Clark Direct mail services


2016 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
Transcontinental - Printing facility TBD No Data Saskatoon, SK Transcontinental  Montreal, QC 5/30/16 Sale of western newspaper titles Link
Page/International Communications Jun-16 No Data Houston, TX None N/A 5/8/16 Commercial printing Link
Harmony Printing 6/14/16 No Data Toronto, ON None N/A 5/8/16 Commercial printing Link
CSI Media TBD No Data Delavan, WI Bliss Communications Janesville, WI 5/3/16 Consolidating print operations Link
Accelerated Printing 5/19/16 No Data Sterling, VA None N/A 5/2/16 Commercial printing Link