Monday, June 8, 2015

De-evolution for eBooks Platform? – May 2015 M&A Activity










ProQuest, the world-class provider of digital content to libraries and researchers announced its commitment to provide printed copies of books with its acquisition of Coutts Information Service from the global book distributor and on-demand printer, Ingram Content Group. As part of the deal, ProQuest will now deliver its content in “e and p” format through an ongoing relationship with Ingram. 

ProQuest traces its history back to 1872, when R.R. Bowker launched Publishers Weekly. The company has evolved to become a mammoth repository and global provider of digital content: with over 90,000 qualified sources, 6 billion digital pages spanning six centuries, the world’s largest collection of academic dissertations and thesis, in excess of 20 million scanned pages of global, national, regional and specialty newspapers, more than 450,000 books, scores of scholarly journals, and unique digitized collections from the world’s great museums and libraries, as well as archives from organizations and other sources such as the Associated Press. The company provides this digitized content to libraries and serious corporate, government, academic, professional and other researchers through a variety of automated online search and document management platforms.

It’s clear that ProQuest is a great home and superbly well-suited strategic buyer for Coutts Information Services, which through its MyiLibrary and Oasis platforms offers access to more than 13 million print titles and over half a million ebook titles. However, in a nod to the more classic form of the book, ink-on-paper, ProQuest will also offer access to Ingram’s extensive inventory of printed books and the ability to order titles in printed form through Ingram’s on-demand print and delivery network. Maybe it’s not de-evolution after all, rather an enlightened co-evolution of “e and p” books.

Commercial Printing

Direct mail combined with variable data printing technology has proven to be an attractive recipe for acquisitions in the commercial printing segment. Chicago-based Vision Integrated Graphics announced the acquisition of direct marketing printer and lettershop Tobe Direct, resulting in a company with total revenues now in excess of $70 million. This is not a “tuck-in” transaction to rationalize overcapacity; Vision Integrated Graphics committed to retain Tobe’s location and all of its employees, and will now have four locations around Chicago.

DOME Print & Marketing Solutions is back on the deal log for the second month in a row, following up on its April acquisition of a wide format printer with the purchase in May of the assets of American Web. The acquired company, also located in Sacramento, California, brings a proprietary e-commerce software platform to DOME, along with other digital marketing services.

Packaging


Kapstone Paper & Packaging, a $2.3 billion revenue producer of kraft paper, containerboard and corrugated packaging products, acquired Victory Packaging/Golden State Container. Victory, based in Houston, Texas, has more than 65 distribution facilities across the US. The acquisition strategically builds a more vertically integrated supplier of packaging products. Kapstone paid an eye-popping $615 million, 11.2 times Victory’s 2014 EBITDA of $55 million, plus contingent earnouts of $45 million, raising the price to an even 12 times EBITDA. Even in the event that the earnouts don’t pan out, and accounting for $100 million of realizable tax benefits, the multiple paid is still a very robust 9.4 times.

Green Bay Packaging, which acquired Great Lakes Packaging and Midland Container in October, 2014, was active again in May with its acquisition of Baird Display, printer and manufacturer of point-of-purchase retail marketing displays.

Newspapers

Consolidation continues unabated in the newspaper publishing segment, as publishers try to stay ahead of the ongoing downward spiral in subscription and advertising revenue. Chicago’s Tribune Publishing, itself only recently spun out of the Tribune Company last August in the great disgorgement spree of print media from major multi-platform companies (see The Target Reports June 2014 and July 2014), acquired the San Diego Union-Tribune and affiliated titles. Shortly after closing the deal, the company announced it was closing the acquired printing facility and moving production to its new sister newspaper, The Los Angeles Times, affirming another trend we have noted, the regionalization of newspaper production enabled by more efficient presses and driven by open capacity on those presses as run lengths and page counts decline.

Also on the west coast, a much smaller player in the newspaper roll-up trend, Metro Newspapers in San Jose, California acquired The Pacific Sun which serves the San Rafael area. The parent company now publishes eight papers with a combined weekly circulation of 190,000.

Equipment

Swiss-based manufacturer of first-rate diecutting presses, the Bobst Group, acquired the Italian manufacturer of flexographic printing presses, Nuova Gidue, once again demonstrating the continued strength of the flexo printing process, especially in the packaging segment. Other recent deals have included Heidelberg’s acquisition of Gallus, the Swiss-based flexo press manufacturer, and KBA’s acquisition of Italy-based Flexotecnica. 


2015 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
Central National-Gottesman $5,000 Purchase, NY Performance Paper
(Sub. Cellmark)
No Data Los Angeles, CA 5/20/15 No Data Acquisition Paper distribution Link
Bobst Group $1,399 Lausanne,
Switzerland
Nuova Gidue No Data Campi Bisenzio,
Italy
5/13/15 No Data Controlling Interest Flexo printing presses Link
DOME Print & Marketing Solutions No Data Sacramento, CA American Web No Data Sacramento, CA 5/13/15 No Data Asset Acquisition E-commerce software Link
Tribune Publishing $1,690 Chicago, IL MLIM
(San Diego Union-Tribune)
No Data San Diego, CA 5/8/15 $185.0 Acquisition Metro & regional newspapers Link
Metro Newspapers No Data San Jose, CA The Pacific Sun No Data San Rafael, CA 5/7/15 No Data Acquisition Community newspaper Link
Vision Integrated Graphics No Data Chicago, IL Tobe Direct No Data Bolingbrook, IL 5/6/15 No Data Acquisition Direct marketing / lettershop
(Combined $70Mil revenue)
Link
Safeguard Business Systems
(Sub. of Deluxe)
$1,700 Dallas, TX Fontis Solutions $40.0 Irvine, CA 5/5/15 No Data Acquisition Print & marketing services Link
Kapstone Paper & Packaging $2,300 Northbrook, IL  Victory Packaging/
Golden State Container
$953.0 Houston, TX 5/5/15 $515.0 Asset Acquisition Packaging distribution Link
Green Bay Packaging No Data Green Bay, WI Baird Display No Data Waukesha, WI 5/4/15 No Data Acquisition Point-of-Purchase displays Link
ProQuest No Data Ann Arbor, MI Coutts Information Services
(sub. Ingram)
No Data Avon House, UK 5/1/15 No Data Acquisition Book systems for libraries Link


2015 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:
Advanced Graphics, Inc. 5/27/15 No Data 15-50718 Stratford, CT 2nd Connecticut
Bridgeport, CT
Alan H.W. Shiff James Berman Screen & pad printing
Chapter 7 Filings:
No Chapter 7 Filings Found this Month --- --- --- --- --- --- --- --- ---


2015 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
San Diego Union-Tribune - Printing Plant 5/27/15 No Data Mission Valley, CA Tribune Publishing Chicago, IL 5/27/15 Consolidating print operations Link

Wednesday, May 6, 2015

Catching the Falling Knife versus Personal Branding – April 2015 M&A Activity


A Maine newspaper group has cleaned up its balance sheet, improved the quality of its journalism, and plans to improve the efficiency of its print operations. MaineToday Media announced that it is being purchased by local businessman and publisher Reade Brower. Brower teamed up with Chris Miles, his partner in another venture, Alliance Press, to purchase the papers from billionaire hedge fund manager S. Donald Sussman. Sussman saved MaineToday Media, Maine’s dominant news organization, from almost certain closure in 2011 when he purchased the insolvent company from HM Capital Partners. 

Sussman reportedly invested a total of more than $16 million in the publishing company. He appears to be walking away happy even though the entire proceeds from the latest sale are going to pay down company debt. In an eloquent commentary on the value of maintaining high journalistic standards in the print medium, Sussman stated that it was his “honor to have been the steward of these trusted newspapers.” It remains to be seen if the buyers have caught the falling knife (the company has been sold four times in 17 years, each time for far less than before), or if they can continue to uphold the “value of local, quality journalism and the civic responsibility the paper has to its community.”

This commitment to produce exceptional reporting stands in stark contrast to the model of delivering repetitive, regurgitated content delivered via online aggregators. Poor quality content apparently does not hold up, as evidenced by the recent closure of the Philadelphia-based company Brand.com. Originally named Reputation Changer, the company was in the business of writing positive articles about folks who had numerous negative online reviews. The company then flooded online sites with the ersatz positive articles in hopes that the onslaught would push negative articles below page one on Google. When Google got wise and changed its algorithm to minimize the effectiveness of the article blitz, Brand.com switched gears. In the journalistic version of advertising disguised as independent reporting (so-called “native advertising”) the company began offering “commission reporter-written articles.” The strategy failed, there was no billionaire hedge fund savior for Brand.com. The company filed for Chapter 7 liquidation in April.

Note: As regular readers of The Target Report will know, we usually steer clear of the “defense-of-print” debate and leave that to others. The chips will fall where they will as consumers make their decisions on the value of content within competing media channels and vote by how they view their news, read their books, obtain intellectual content and respond to advertising. Nonetheless, we think that the above contrasting developments are interesting and moreover, we suspect that the folks in Maine are happy to have reporting they can trust, sustained through the survival of their local newspapers.

Commercial Printing

Acquisition activity in the commercial printing segment picked up. As we have predicted in our last two annual projections, wide format printing companies continue to be attractive targets for commercial printing companies which seek to cross-sell the new services into their existing clients. As a bonus, the acquiring company adds new clients for their traditional printing services. NextPage in Kansas City, Missouri acquired Print Big Solutions, stating this exact strategy as their rationale for the deal. DOME Print & Marketing Solutions, a web and sheetfed commercial printer in Sacramento, California, acquired wide format printer Color Solutions. With backing from Ancor Capital Partners, Tennessee-based Identity Group Holdings acquired retail signage supplier Allen Screen Printing in Maine.

Commercial printers consolidated with other commercial printers. MET Fine Printers, located in Vancouver, British Columbia acquired Rhino Print Solutions with facilities in Vancouver and Calgary, Alberta. Neuger Communications Group acquired Engage Print, both located in Northfield, Minnesota. Grafika, a printer in Sinking Spring, Pennsylvania, acquired Reading-based Offset Impressions.

PE fund Waveland Investments picked up retail circular printing company Doodad with facilities in Georgia and Pennsylvania.

Marketing Services

Atlanta-based marketing services provider and printing company Phase 3 Marketing & Communications acquired boutique creative studio Brand Fever. The acquiring company offers traditional services including digital and offset printing, graphic design, warehousing and fulfillment, and has also moved upstream into branding, strategic planning and social media.

Packaging

The packaging segment was uncharacteristically quiet in April, however Pratt Industries, which has common ownership ties to papermaking assets in Australia, picked up Robert Mann Packaging for $60 million. The acquired company will use imported lightweight kraft paper from its new owner to produce its corrugated cartons which are used primarily for packaging food and other agricultural products.

Lettershop & Direct Mail

EU Services in Rockville, Maryland, announced the acquisition of Sisk Mailing Service. The Sisk operations were integrated into EU Services’ two locations. EU Services was itself acquired in August, 2014 by Maidstone Capital, which also owns Com-Pak Services in Moorestown, New Jersey.


2015 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
Releases
NextPage No Data Kansas City, MO Print Big Solutions No Data Kansas City, MO 4/29/15 No Data Acquisition Wide format printing Link
MTM Media No Data Bath, ME MaineToday Media No Data Portland, ME 4/28/15 No Data Acquisition Daily & weekly newspapers Link
Proforma Signature Solutions No Data Brooklyn
Heights, OH
Artistic Printing No Data Artistic Printing & Specialty Adv. 4/23/15 No Data Acquisition Print distributor Link
Neuger Communications Group No Data Northfield, MN Engage Print No Data Northfield, MN 4/21/15 No Data Acquisition Commercial printing Link
Grafika No Data Sinking Spring, PA Offset Impressions No Data Reading, PA 4/21/15 No Data Acquisition Commercial printing Link
Advisors Excel No Data Topeka, KS Modern No Data Valparaiso, IN 4/20/15 No Data Acquisition Printing & CD/DVD production Link
MET Fine Printers No Data Vancouver, BC Rhino Print Solutions No Data Vancouver, BC 4/17/15 No Data Asset Acquisition Commercial printing Link
Signarama No Data Milwaukee, WI Design Craft Signs No Data Hales Corners, WI 4/15/15 No Data Acquisition Internal signage Link
Phase 3 Marketing & Communications No Data Atlanta, GA Brand Fever No Data Atlanta, GA 4/15/15 No Data Acquisition Creative services Link
Pratt Industries $2,350 Conyers, GA Robert Mann Packaging $150.0 Salinas, CA 4/14/15 $60.0 Acquisition Corrugated cartons Link
Identity Group Holdings
(Port. Co. Ancor Capital Partners)
No Data Nashville, TN Allen Screen Printing No Data Scarborough, ME 4/14/15 No Data Acquisition
(Aleutian Capital)
Retail signage Link
DOME Print & Marketing Solutions No Data Sacramento, CA Color Solutions No Data Sacramento, CA 4/10/15 No Data Asset Acquisition Wide format printing Link
Waveland Investments No Data Highland Park, IL Doodad No Data Austell, GA 4/10/15 No Data Acquisition
(Edgepoint Capital)
Retail circular printing Link
Sun Graphics No Data Parsons, KS Donlevy Lithograph No Data Wichita, KS 4/9/15 No Data Acquisition Commercial printing Link
EU Services No Data Rockville, MD Sisk Mailing Service No Data Stevensville, MD 4/7/15 No Data Acquisition Lettershop services Link
Fedrigoni Group € 809.0 Verona, Italy Gummed Papers of America
(Port. co. Svoboda Capital Partners)
No Data McCook, IL 4/2/15 $50.0 Acquisition Specialty substrate distributor Link


2015 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:
J.B Kreider Printing Co. Inc. 4/29/15 No Data 15-21510 Pittsburgh, PA 3rd Western PA
Pittsburgh
Carlota M. Bohn Donald R. Calaiaro Commercial printing
Chapter 7 Filings:
Brand.com 4/14/15 No Data 15-12565 Philadelphia, PA 3rd Eastern PA
Philadelphia
Jean K. FitzSimon Robert N. Braverman Content marketing platform


2015 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
No Plant Closures Found this Month --- --- --- --- --- --- --- ---