Monday, May 6, 2019

The De-Evolution of Cenveo – April 2019 M&A Activity


Cenveo announced its first M&A transaction since its emergence from bankruptcy in September 2018, with the sale of its long-run label and paper receipt businesses to Iconex, a portfolio company that Atlas Holdings carved out of NCR Corporation in 2016. With this divestiture, the latest in a long string of spin-offs, Cenveo continues its evolution from its beginnings in 1994 as a humble manufacturer of envelopes to a high-flying printing industry roll-up. With its fingers in multiple specialties, at one time or another, Cenveo has offered high-quality commercial printing, business forms for the distributor market, labels and packaging, office supplies, paper extrusion and coating, content management and production of scientific, technical and medical journals. In short, if there was ink being put on something, Cenveo was a buyer.

In high-end commercial printing, the segment of the printing world that I came from, the 1990’s was the heyday of print consolidation. In this highly competitive, but sometimes rarified, top echelon of super printers, the drumbeat of deals was primarily driven by two publicly-owned companies, Mail-Well and Consolidated Graphics. These serial acquirers used a combination of cash from debt and issuance of public stock, along with their own stock as currency, to roll-up many of the legendary names in the commercial printing industry. It seemed as if Mail-Well, the original name of Cenveo, and its arch-rival Consolidated Graphics were in a feeding frenzy to capture as many of the independent successful and renowned family-owned printing companies in the shortest time possible. There were some second-tier roll-ups, including Printing Arts America and Nationwide Graphics, but the real action was with Mail-Well and Consolidated.

Names such as The Graphic Arts Center in Portland and Anderson Lithograph in Los Angeles were among the icons of printers capable of meeting the demanding standards required to produce high-end automotive books and the best annual reports. Graphic designers would insist that their work only be printed at a select few printing companies that they elected to elevate to the stratosphere of high-end commercial shops, often traveling long distance to provide on-press guidance. Many of those iconic names disappeared in 2004 when Mail-Well jettisoned the 40-plus individual brand names that were the legacy of its non-stop acquisition spree and consolidated all its operations under the Cenveo brand. Both the Portland and Los Angeles locations were subsequently shuttered as the company downsized, upsized, downsized again and restructured in the intervening fifteen years.


Click on Chart to Enlarge

During its formative years from 1994 to 2001, Cenveo had acquired, on average, another printing plant and 120 new workers every other week for seven years. At one point, Cenveo employed more than 13,000 and operated at least 110 printing plants. Now out of bankruptcy, the company is privately-held and, according to its website, employs 6,000 and operates only slightly more than 30 facilities.

With the bankruptcy behind it, the new CEO of Cenveo (and son of the prior CEO) stated that this latest divestiture sets the stage for Cenveo to “be one of the leading manufacturers of envelope, custom labels and 
print related products.” It remains to be seen if Cenveo, no longer the formidable acquirer it once was, has finally found a defensible strategic position within the larger printing industry. We won’t be surprised if the company itself becomes a target as did its rival Consolidated Graphics in 2013 (See RR Donnelley buys CGX - Strategic Brilliance or Competitors' Opportunity?) Will the Cenveo brand, maybe not so iconic as its targets once were, but certainly a “player” on the field, go the way of so many others and fade into printing M&A history?

Commercial Printing and Convergence of Diversified Services
Knepper Press, a diversified commercial printing company operating out of its facility in the Pittsburgh, Pennsylvania metro area, acquired TBN, the commercial printing affiliate of The Buffalo News, the local newspaper in Buffalo, New York. The transaction is not dissimilar to others over the past several years as local and regional newspapers struggle to develop a sustainable revenue model in the face of competition from the internet. When they discover that adjacent commercial printing operations are not necessarily the path to better profits, the operation is spun out. Two years ago, another Pennsylvania printing company not too distant from Knepper, Intellicor Communications, acquired Intelligencer Printing from its parent, the publisher of The Intelligencer newspaper (See The Target Report: Legacy Printing Companies Fade Into History – April 2017).

MSP, a full-service direct mail production and marketing company, also located in the greater Pittsburgh area, announced the acquisition of David J. Thompson Mailing, a more traditional lettershop and mailing services company located several hours eastward across the state in Bloomsburg. The acquired company will be brought under the MSP brand, with plans to retain the acquired facility and employees. The transaction once again illustrates the trend that appears to be picking up steam; the consolidation of companies operating in the direct mail printing, mail processing and mailing services business.

2019 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
Release
Iconex
(Port co. Atlas Holdings)
No Data Greenwich, CT Labels & Paper Receipt Business
(Div. Cenveo)
No Data Joplin, MO &
Jefferson City, TN
4/29/19 No Data Acquisition Labels & paper receipts Link
Knepper Press $38.5 Clinton, PA TBN (Div. The Buffalo News) No Data Buffalo, NY 4/26/19 No Data Acquisition Commercial printing Link
James Cohen No Data Parsippany, NJ National Enquirer (+2 titles)
(Prop American Media)
No Data New York, NY 4/18/19 $100.0 Acquisition Tabloid newspaper Link
Koenig & Bauer (KBA) $1,378 Wurzburg, Germany All-Print Group No Data Stockholm, Sweden 4/15/19 No Data Acquisition Packaging marking & coding Link
Siris Capital Group No Data New York, NY Electronics for Imaging (EFI) $1,020 Foster City, CA 4/15/19 $1,700 Stock acquisition Imaging technologies Link
Blooming Color $9.6 Lombard, IL Graphics Plus No Data Lisle IL 4/12/19 No Data Acquisition Commercial printing Link
MSP No Data Freedom, PA David J. Thompson Mailing No Data Bloomsburg, PA 4/11/19 No Data Asset acquisition Mailing services Link
Signs.com No Data Salt Lake City, UT Ferrari Color No Data Salt Lake City, UT 4/2/19 No Data Acquisition Wide format printing Link
CCL Industries $5,160 Toronto, ON Hinsitsu Screen (Vietnam) No Data Haiduong, Vietnam 4/1/19 No Data Acquisition Label printing Link
Minuteman Press Barrington No Data Barrington, IL Forrest Press No Data Lake Barrington, IL 4/1/19 No Data Acquisition Printing & copying Link


2019 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:
E Z Mailing Services Inc. 4/18/19 No Data 19-17900 Elizabeth, NJ 3rd New Jersey Stacey L. Meisel Kenneth L. Baum Mailing services
Chapter 7 Filings:
Rose Printing Company, Inc. 4/25/19 No Data 19-40222 Tallahassee, FL 11th Northern FL
Tallahassee
Karen K. Specie Thomas B. Woodward  Book printing
Trek Media Group, LLC 4/25/19 No Data 19-02778 Casselberry, FL  11th Middle FL
Orlando
Cynthia C. Jackson Michael A. Paasch  Commercial print & promotional
Johnson Publishing Company, LLC 4/9/19 No Data 19-10236 Chicago, IL 7th Northern IL
Chicago
Jack B. Schmetterer Howard L. Adelman  Magazine publishing


2019 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
Siler Printing 6/11/19 No Data Denver, CO None N/A Apr-19 Commercial printing, consolidating merger Link
Southeast Media 6/4/19 No Data Houston, TX None N/A Apr-19 Commercial printing Link
Printcraft Press 6/4/19 No Data Portsmouth, VA None N/A Apr-19 Commercial print operation Link
TBN (The Buffalo News) 5/2/19 No Data Buffalo, NY The Buffalo News Buffalo, NY Apr-19 Commercial print operation Link

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