Saturday, October 7, 2017

Print Supply Chain Consolidation – September 2017 M&A Activity


Barry-Wehmiller may not be a familiar name in the printing industry, but nonetheless this serial acquirer is clearly committed to the business of putting ink on paper. Behind the scenes, the company now owns many of the manufacturers that make the machines required to sheet, convert, fold, palletize, corrugate, prep for mailing, and pack paper into useful products. Embarking in 1987 on a strategy to provide manufacturing technology for the packaging, corrugating, sheeting and paper-converting industries, the privately-held US company is now a $2.8 billion global organization with 11,000 employees. 

While the industry is rocked by a seemingly constant stream of game-changing consolidations (more on that next month), Barry-Wehmiller continues to rack up its own steady stream of acquisitions of print technologies and machinery, announcing in September the purchase of Graphbury Machines through its Pennsylvania-based division, Paper Converting Machine Company. The acquired company makes machines that use lasers to clean anilox rollers in flexo printing operations.

BW Forsyth Partners, a partnership of Barry-Wehmiller and a team of private equity investors, announced two acquisitions, also in September, through its portfolio company Baldwin Technology. (The Baldwin name is likely much more familiar to printers who know Baldwin from its aftermarket sprayers, fountain solution circulators, UV and IR drying systems, and web process controls.) The acquisition of Ahlbrandt Systems adds web treatment equipment to its lineup, followed up by the addition of print inspection systems with the purchase of PC Industries, located in Gurnee, Illinois.


The Supply Chain – Equipment and Material Inputs

Looking back over the past twelve months, M&A activity, as reported in The Target Report, has been robust among those companies that support the printing, packaging and related industries with the equipment, materials and supplies needed every day to manufacture printed products. We noted 47 deals on the input side of the supply chain in our deal log, with the majority being manufacturers of materials. Transactions in which the acquired company was an equipment manufacturer were about even with acquisitions of distributors.




Equipment Manufacturers

As one would expect in the printing industry, the majority of acquisitions in the equipment segment over the past twelve months are in some way related to the traditional workhorse of the industry, the printing press. Also, as the initial wave of inkjet technologies matures, makers of flatbed inkjet devices have become attractive targets. M&R Companies, a portfolio company of Corinthian Capital, expanded beyond its core competency manufacturing screen printing equipment with the purchase of Novus Imaging, the New Hampshire-based manufacturer of digital flatbed and roll-to-roll UV inkjet printers.

As noted above, Barry-Wehmiller recently acquired a print quality control company. During the past year, another print quality control company, Advanced Vision Technology was purchased by another acquisition-driven private company, Danaher (see The Target Report – March 2017).



Earlier this year, Barry-Wehmiller, through its Winkler + D√ľnnebier subsidiary, acquired Halm Industries, the maker of the ubiquitous Halm Jet Press, for decades the press used to print millions and millions of pre-converted envelopes.

Altor Funds, a private equity fund based in Copenhagen, acquired the TRESU Group from another fund in a secondary buyout (for more on secondary buyouts see The Target Report – October 2016). The acquired company is a manufacturer of high performance flexographic printing presses, primarily used to print packaging. Indicative of the rise of flexographic printing as a serious contender for printing high-quality packaging, the largest number of deals involving equipment in the past year have involved flexo. 




Material Manufacturers

Deal activity has been robust in the materials segment, with the majority of the deals involving inks, including pigments, colorants and coatings. Large companies have repeatedly acquired small innovative companies for their specialty inks developed for specialty applications such as fabric printing, UV-cured inks, electro-conductive inks and digital printing. For example, Sun Chemical, a division of Japan-based Dainippon Ink & Chemicals, acquired RJA Dispersions, a maker of high-quality pigment dispersions used in digital printing.

Closely behind transactions involving ink manufacturers, in terms of numbers of deals, are acquisitions of companies that manufacture papers. If we had included bankruptcies and plant closures in our counts, then paper deals would have been the majority. It’s clear that one of the primary reasons for deals in the paper manufacturing segment is shrinking demand for paper, with two more mills closing in the past year, Southworth Company in Agawam, Massachusetts and the PaperWorks mill in Philadelphia.
Southworth subsequently filed Chapter 11 bankruptcy at the end of September.


As with the breakdown of equipment manufacturers by printing process, when we drill down into the deals involving ink, we find that in the past twelve months the lead in terms of deal count is again the flexographic printing process. 




Distributors of Printing Supplies

The consolidation in the paper distribution business has been at a steady drumbeat for the six years that we have been researching and writing The Target Report.* Lindenmeyr Munroe, a division of privately-held Central National Gottesman, acquired paper distributor Independent Paper Group in St. Paul, Minnesota. In keeping with the times, and the growth of wide format printing, Lindenmeyr also acquired a distributor of wide format supplies, KFI Technology based in Trenton, New Jersey. 




*This edition of the TR marks six years since we published the first Target Report deal log and commentary, and published every month thereafter.


2017 September - 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
Chartpak No Data Leeds, MA W.G. Fry No Data West Springfield, MA 9/29/17 No Data Acquisition Paper converting & binding Link
C.J. Group of Companies No Data Toronto, ON Annan & Sons No Data Toronto, ON 9/29/17 No Data Acquisition Commercial printing Link
Grimco No Data Fenton, MO Advantage Sign & Graphic Solutions No Data Hudsonville, MI 9/26/17 No Data Acquisition Graphic supplies distributor Link
Southeastern No Data Stuart, FL Dutton Press No Data Hialeah, FL 9/25/17 No Data Acquisition Commercial printing Link
Raycom Media No Data Montgomery, AL Community Newspaper Holdings No Data Montgomery, AL 9/25/17 No Data Merger Regional & local newspapers Link
Phoenix Color
(Div. ALJ Regional Holdings)
No Data Hagerstown, MD Moore-Langen Printing
(Div. LSC Communications)
No Data
($3,540)
Terre Haute, IN 9/21/17 No Data Acquisition Book components Link
Vanguard Digital Printing Systems No Data Suwanee, GA Inkjet Technology No Data Fort Worth, TX 9/21/17 No Data Acquisition Flatbed inkjet printers Link
Baldwin Technology
(Port co. BW Forsyth Capital)
$103.7 St. Louis, MO PC Industries No Data Gurnee, IL 9/18/17 No Data Acquisition Print inspection systems Link
Paper Converting Machine Co.
(Div. Barry-Wehmiller)
No Data
($2,800)
Green Bay, WI Graphbury Machines No Data Green Bay, WI 9/18/17 No Data Acquisition Flexo press accessories  Link
Integ No Data Waco, TX Insite Group No Data Bryan, TX 9/13/17 No Data Acquisition Commercial printing Link
Binkley Co. No Data Anchorage, AK Alaska Dispatch News No Data Anchorage, AK 9/11/17 $1.0 363 Sale in Ch. 11 Newspaper publisher Link
Baldwin Technology
(Port co. BW Forsyth Capital)
$103.7 St. Louis, MO Ahlbrandt System No Data Lauterbach, Germany 9/8/17 No Data Acquisition Web treatment equipment Link
LSC Communications $3,540 Chicago, IL Publishers Press $185.0 Shepardsville, KY 9/7/17 No Data Acquisition Magazine printing & services Link
Tronc $1,540 Chicago, IL New York Daily News No Data New York, NY 9/5/17 One Dollar Acquisition Metro newspaper Link
ProAmpac
(Port co. Pritzker Group)
No Data Cincinnati, OH PolyFirst Packaging No Data Hartford, WI 9/5/17 No Data Acquisition Pouches, bags & roll stock Link
NAPCO No Data Sparta, NC Vulcan Information Packaging
(Sub. EBSCO Industries)
No Data Vincent, AL 9/1/17 No Data Acquisition Presentation products Link
Wise  No Data Alpharetta, GA Datatel Resources No Data Monaca, PA 9/6/16 No Data Acquisition
(Corp Dev w/ GAA)*
Business forms Link


2017 September - 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:
Southworth Company 9/28/17 No Data 17--30817 Agawam, MA 1st Massachusetts
Springfield
Elizabeth D. Katz Joseph B. Collins  Specialty papers
Edwards Mail Service, Inc. 9/17/17 No Data 17-50235 Lubbock, TX 5th Northern TX
Lubbock
Robert L. Jones David L. Campbell  Mail logistics
Chapter 7 Filings:
Printgraphix, Inc. 9/6/17 No Data 17-13340 Pembroke, MA 1st Massachusetts
Boston
Melvin S. Hoffman Amy Lee Lipman-White  Commercial printing


2017 September - 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
Graphic Packaging Dec-17 No Data Santa Clara, CA Graphic Packaging Atlanta, GA 6/21/17 Coated recycled paper mill Link
Parrot Press Dec-17 No Data Fort Wayne, IN None N/A Sep-17 Commercial printing Link
Gannett - Printing facility 10/4/17 No Data Wausau, WI Gannett McLean, VA Sep-17 Consolidating newspaper printing Link
Gannett - Printing facility 10/4/17 No Data Waupaca, WI Gannett McLean, VA Sep-17 Consolidating newspaper printing Link

* Graphic Arts Advisors, publisher of The Target Report, in conjunction with Corporate Development Associates, served as exclusive advisors to Datatel in this transaction.

Thursday, September 7, 2017

Williams Lea Tag is on the Move – August 2017 M&A Activity


Printing and marketing services companies should be prepared for a renewed onslaught on their large corporate accounts. One the world’s top print management companies, Williams Lea Tag, was just acquired by Advent International, the sixth largest private equity fund in the world (with $39 billion under management). Headquartered in London, Williams Lea Tag has been owned since 2006 by the massive logistics and postal services company, Deutsche Post DHL Group, known worldwide for its yellow DHL trucks and overnight envelopes. Once the carve-out is complete, Advent is planning for “further growth on a global scale” for its newly independent company, and it has the investment capital to fund that strategy. 

From its founding in 1820 in London as a financial printing business, Williams Lea Tag has grown into a global business process outsourcing company, delivering integrated marketing and communications services. Originally focused on providing print management services, the company moved upstream in a big way in 2011 with the purchase of the design and production agency Tag Worldwide. With over 10,000 employees in more than 40 countries, Williams Lea Tag offers services in four areas: creative production, sourcing, customer communications and publishing, and document workflow. Competitors should expect that with its new owners focused on growth, Williams Lea Tag will be pushing hard to unseat the incumbent providers of these services to large “A-list” customers currently served by independent printers and marketing service providers.

Williams Lea, as it was known in the year 2000, invented the current print management model, landing a ground-breaking contract for AXA insurance, in which the company assumed all responsibility for the management of all AXA’s print production activities in the UK. According to their press release at the time, “this radical solution involved a substantial number of staff transfers” (from AXA’s payroll to Williams Lea’s). By 2009 the company was using this strategy very effectively and signing significant new deals in the US.

The other major player in the print management business, InnerWorkings, got off the ground shortly thereafter in 2001, and now reports in excess of $1 billion in annual revenues. Pitney Bowes also jumped into the game, and RR Donnelley offered print management services that competed directly in the “total outsourcing” space.

The Williams Lea strategy was more than just external cost reduction achieved through aggressive buying practices. As Williams Lea discovered, hiring a client’s print purchasing personnel enabled them to promise and deliver fully burdened cost reductions that most printers simply can’t match. Only large sophisticated companies, such as Williams Lea Tag and Innerworkings, have the financial strength and organization to absorb multiple personnel that may be geographically distributed and accustomed to working within a large corporate structure. The print management proposition is sold to prospective customers at the CEO or CFO level, outlining the total cost of managing the procurement, storage and distribution of their printed materials. By the time the typical commercial printer learns that their treasured account is at risk, the game is effectively over.

The print management companies have continued to evolve. WorkflowOne was acquired by Standard Register (see The Target Report – August 2013), which in turn was acquired by Taylor Corporation when Standard Register filed bankruptcy (see The Target Report – June 2015). Williams Lea acquired Tag Worldwide in 2011, providing creative, prepress and production services, working with and also competing with advertising agencies. In 2013, Innerworkings acquired EyeLevel which designs and produces retail displays. (see The Target Report – July 2013) The month before, Innerworkings acquired Professional Packaging Systems in the UK, a print broker and designer of high-end packaging. In a carve-out similar to this latest deal, another huge fund, Apollo Global Management, acquired Pitney Bowes Management Services, since renamed Novitex and most recently merged into Exela Technologies.

Although the print management firms initially took advantage of and were enabled by the chronic overcapacity in the printing industry, the major players continue to head upstream into design, content creation and document management where the margins are greater. Independent printers should beware and prepare – if they have not yet done so, a print management company will be knocking on the door of one of their best accounts promising reductions in their print spend.

Commercial Printing and Diversified Services

Mittera Group, based in Des Moines, Iowa, is now on the national stage of contenders entering the roll-up space in the commercial printing segment. That role was left wide open when Consolidated Graphics closed up its M&A shop and rolled itself into the RR Donnelley company – that was before RRD split itself up last year. Mittera announced that it has acquired Earthcolor, a significant player in the high-end commercial printing market on the east coast. Headquartered in Parsippany, New Jersey, Earthcolor also has manufacturing facilities in Texas, Florida and on Long Island, New York. With plants in Iowa and Wisconsin, Mittera now has coverage across the Midwest, Eastern US and Southeastern regions.

The Stevens Group in Elmhurst, Illinois announced the acquisition of CL Graphics* in nearby Crystal Lake. CL Graphics serves a number of niche markets, including nonprofits, libraries, and associations, as well as small and medium-sized businesses in a range of industries. Production will be consolidated in the Elmhurst facility.

Corporate Press has acquired the McArdle Solutions division of Bloomberg BNA in Upper Marlboro, Maryland. In a “reverse tuck-in” transaction, Corporate press will be moving their operation, as well as consolidating their ColorCraft subsidiary, into the acquired company’s facility. The company also announced a rebranding as Corporate Communications Group.


Packaging

WestRock, the combination of RockTenn and Westvaco (see The Target Report – January 2015) continues to build out a global integrated paperboard and packaging production platform, announcing the acquisition of Hannapak in Australia. The acquired company produces folding cartons for the beverage, food, confectionary and healthcare markets. WestRock paid $60 million in cash for the company, seven times EBITDA before accounting for any expected synergies which are expected to bring the effective multiple to less than five times EBITDA.

ProAmpac, a portfolio company of the Pritzger Group and regular entry on our deals logs, has acquired the Clondalkin Flexible Packaging Orlando division of global packaging producer Clondalkin based in The Netherlands. The acquired facility produces lids and films, primarily for the food industry. Included in the products produced are spiral labels that are used on refrigerated dough products and frozen orange juice, among others.

In corrugated box production, Sacramento Container Corporation was acquired by Packaging Corporation of America, based in Lake Forest, Illinois. Packaging Corporation now reports in excess of $6 billion in revenues, and paid $265 million in cash for the acquired assets which includes two facilities in California. The pre-purchase price multiple was not disclosed, however the post-purchase multiple, taking into account tax benefits and synergies, was reported at five times EBITDA.

Oliver Printing & Packaging, a portfolio company of Pfingsten Partners, has acquired Pohlig Packaging, the first bolt-on for the Oliver platform since being acquired in 2016 by the private equity fund. The acquisition of Pohlig in Richmond, Virginia, establishes Oliver which is located outside of Cleveland in Twinsburg, Ohio, as a multi-plant folding carton manufacturer.


* Graphic Arts Advisors, publisher of The Target Report, served as exclusive advisors to CL Graphics in this transaction.


2017 August - 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
The Stevens Group No Data Elmhurst, IL CL Graphics No Data Crystal Lake, IL 8/30/17 No Data
Acquisition
(Graphic Arts Advisors)
Commercial printing Link
Prism Inks No Data Sunnyvale, CA Graphics One No Data Sun Valley, CA 8/30/17 No Data Acquisition Supplies distributor Link
Mittera Group No Data Des Moines, IA Earthcolor No Data Parsippany, NJ 8/28/17 No Data Acquisition Commercial printing Link
Advent International No Data Boston, MA Williams Lea Tag
(Div. DHL)
No Data London, Uk 8/24/17 No Data Acquisition Print management Link
SG360°
(Port Co. ICV Partners)
No Data Wheeling, IL Data Service Solutions No Data Bolingbrook, IL 8/22/17 No Data Acquisition Print finishing Link
ProAmpac
(Port co. Pritzker Group)
No Data Cincinnati, OH Clondalkin Flexible Packaging
(Div. Clondalkin Group)
No Data Orlando, FL 8/21/17 No Data Acquisition Packaging lids and films Link
Proforma Albrecht & Co. $34.0 Milford, OH Professional Image No Data Cincinnati, OH 8/21/17 No Data Acquisition Promotional items Link
Packaging Corp of America $6,080 Lake Forest, IL Sacramento Container Corp. No Data McClellan, CA 8/21/17 $265.0 Acquisition Corrugated boxes Link
Sun Chemical
(Div. Dainippon Ink & Chemicals)
$7,500 Parsippany, NJ Joules Angstrom No Data Pataskala, OH 8/18/17 No Data Acquisition UV printing inks Link
Corporate Press No Data Lanham, MD McArdle Solutions
(Div. Bloomberg BNA)
No Data Upper Marlboro, MD 8/15/17 No Data
Acquisition
(New Direction)
Commercial printing Link
Spicers Paper
(Div. Central National Gottesman)
$5,500 Purchase, NY JC Paper No Data Fremont, CA 8/15/17 No Data Acquisition Paper distribution Link
Oliver Printing & Packaging
(Port co. Pfingsten Partners)
No Data Twinsburg, OH Pohlig Packaging No Data Richmond, VA 8/14/17 No Data Acquisition Folding cartons
(Combined $50Mil revenue)
Link
New Media Investment Group $1,200 Pittsford, NY Morris Publishing Group No Data Augusta, GA 8/9/17 $120.0 Acquisition Regional & local newspapers Link
UPM Raflatac $1,500 Mills River, NC Southwest Label Stock No Data Irving, TX 8/7/17 No Data Acquisition Pressure sensitive papers Link
Georgia-Pacific
(Div. Koch Industries)
No Data Atlanta, GA PAX Corrugated Products No Data Lebanon, OH 8/2/17 No Data Acquisition Retail display & packaging Link
WestRock $14,410 Norcross, GA Hannapak No Data North Richmond,
Australia
8/1/17 $60.0 Acquisition Folding cartons Link
Konica Minolta $8,770 Tokyo, Japan Muratec America No Data Plano, TX 8/1/17 No Data Acquisition Office printers & label presses Link


2017 August - 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:
Image Graphics 2000, Inc. 8/22/17 No Data 17-20585 Pompano Beach, FL 11th Southern FL
Fort Lauderdale
John K. Olson Simona Burshteyn  Vehicle wraps
Alaska Dispatch News, LLC 8/12/17 No Data 17-00285 Anchorage, AK 9th Alaska
Anchorage
Gary Spraker  Cabot C. Christianson Newspaper publisher
State Receivership Filings
Appleton Coated 8/17/17 $350.0 N/A Combined Locks, WI --- Wisconsin --- Michael Polsky Specialty coated papers
Chapter 7 Filings:
No Chapter 7 Filings Found this Month --- --- --- --- --- --- --- --- ---


2017 August - 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
Commercial Lithographing Sep-17 No Data Kansas City, MO None N/A Aug-17 Commercial printing Link