Sunday, January 6, 2019

Consolidation in Commercial Printing Rolls On - December 2018 M&A Activity



The roll-up consolidation process is in full swing and gaining momentum in the commercial printing segment. The Mittera Group, based in Iowa and operating plants as far flung as New Jersey, Long Island, Florida and Texas, as well as much closer to home in Wisconsin, announced the acquisition of the Kansas City operation of Henry Wurst, a web and sheetfed commercial printer.

The sale to Mittera is a sudden reversal for the Henry Wurst company, which was confident enough in 2015 to invest a reported $8 million in a new five-unit Goss Sunday 2000 press to modernize its high-volume heatset web printing capabilities. The new press went into production in mid-2016 and doubled the potential page output of the two older presses that were retired in the upgrade. The company president, commenting on the company’s first major investment in quite some time, stated that the new press “puts us back in the game.” Shortly thereafter, in early 2017, Henry Wurst announced the acquisition of Universal Printing, a similarly configured heatset and sheetfed commercial printer located in St. Louis, at the far eastern end of Missouri. In what was a clear consolidation play, the Universal production facility was shuttered, moving production to the renewed platform at Henry Wurst.

The purchase of Henry Wurst by Mittera follows a well-defined playbook in which the Iowa-based consolidator has grown by acquiring larger and larger commercial printing companies, some of which were roll-ups themselves of several venerable companies that had been proudly independent family-owned printing companies. As the prospects of the industry have changed, many of these companies have come on the market at discount. Today’s consolidators in commercial printing are picking up the pieces and rationalizing the excess production capacity by closing facilities and shedding less productive equipment. While the purchase price for Henry Wurst was not disclosed, it was widely known that the Mittera’s acquisition last year of New Jersey-based Earthcolor, itself comprised of several defunct printing companies, was a distressed sale under pressure from the company’s lenders. That deal was structured as a “composition” (i.e. an orderly non-bankruptcy sale of intangible assets and fixed assets, accompanied by a wind-up of the predecessor corporation). That transaction catapulted Mittera onto the national stage; now a leader among the emerging consolidators we noted in past reports (see The Target Report: The Roll-Up Returns (to Commercial Printing – September 2014).




Commercial Printing and Diversified Services


H.I.G. Capital, one of the largest global private equity funds, once again voted with its wallet and expressed confidence in the future of print, announcing the acquisition of Vision Integrated Graphics. Vision, as its now known, is a Chicago area data-driven direct mail marketing powerhouse, with ancillary marketing services, retail display print, and fulfillment services. This is a secondary private equity buyout for Vision, which was previously backed by Concentric Equity Partners.

At H.I.G. Capital, commitment to the print industry runs deep; the fund established a separate platform investment when it acquired Digital Room in January 2018 from venture capital firm Insight Ventures. With revenue in excess of $80 million, Digital Room has four production plants and a multitude of web-to-print website brands including UPrinting, NextDayFlyers, PrintPlace, PrintRunner and 48HourPrint. H.I.G. subsequently bolted Logo Sportswear on to Digital Room. The acquired company sells promotional items and apparel company, all via online e-commerce sites.

GSB Digital, headquartered in Long Island City, New York, provides print and litigation support services to the New York City market and announced the acquisition of Aldine Printing.* GSB will be assuming the production for Aldine’s customers, primarily financial, legal and fashion companies requiring high-end corporate identity and event products.

Aldine’s departure from Varick Street is the latest in a long line of printing company exits from the heart of the traditional printing district in Manhattan, now populated by swarms of Millennials working at tech start-ups, drinking lattes at Starbucks and grocery shopping at the new Trader Joe’s. Printers in Long Island City, home to many of the printing companies exiled from the Varick Street print mecca, now face similar gentrification pressure which is sure to increase as Amazon settles in to its designated second HQ location. Some have already made the move out to the suburbs, completely abandoning New York City as a place to print.

Fuse, a roll-up of three former Chicagoland printing companies, Buhl Press, Kelmscott Communications and Rider Dickerson, took the next step in its growth-by acquisition strategy, acquiring Chicago-based Digital Hub.

SGM Technologies, a Dallas-based digital marketing agency, acquired United Group Printing, also located in Dallas. Structured as a reverse tuck-in, SGM acquired United as a fully operating offset and digital printing facility, including the real estate, as the first step in its plan to grow by acquisition.

In the vast western Canadian region, the Burke Group, headquartered in Edmonton, Alberta, announced the acquisition of two Calgary-based commercial printing companies, Printcor and Topline Printing. Given that the acquired companies are more than three hours distant from Burke’s headquarters in Edmonton, across the Canadian Prairies, the plan is to consolidate the operations into the existing Topline plant in Calgary.

In 2017, the Burke Group acquired its major competitor in Edmonton, McCallum Printing. Sounding a lot like his American roll-up counterparts, the owner and CEO of the Burke Group stated that he “is moving quickly and strategically to drive the print market forward in Western Canada.” We expect that we’ll hear from Burke again.

Franchises

Alliance Franchise Brands, the roll-up of franchised operations in the graphic communications industry, announced the acquisition of RSVP Publications, a Florida-based direct mail system that produces and mails advertising card packages focused on upscale consumers. Alliance, based in Plymouth, Michigan, owns nine franchise systems with over 650 locations. RSVP Publications joins print and marketing service providers Allegra, Insty-Prints, KKP, and American Sir Speedy, as well as wide format print providers Image360 , Signs by Tomorrow, and Signs Now. True to form for Alliance, RSVP Publications is structured as a franchised operation and joins Alliance under the Allegra banner.


* Graphic Arts Advisors, publisher of The Target Report, served as advisors to Aldine Printing in this transaction.
 Graphic Arts Advisors, publisher of The Target Report, served as advisors to United Group Printing in this transaction.



2018 December - 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
Mittera Group $165.8 Des Moines, IA Henry Wurst
(Kansas City operations)
$91.5 Kansas City, MO 12/21/18 No Data Asset Acquisition
(New Direction)
Commercial printing Link
Greif $3,870 Delaware, OH Caraustar Industries
(Port co. H.I.G. Capital)
$1,400 Austell, GA 12/20/18 $1,800 Acquisition Paperboard mills & products Link
Manroland Goss
(Port co. American Ind. Partners)
$298.5 Augsburg, Germany GWS Printing Systems No Data Waalwijk, Netherlands 12/20/18 No Data Acquisition Press sales & upgrades Link
GSB Digital No Data Long Island City, NY Aldine Printing No Data New York, NY 12/20/18 No Data Acquisition
(Graphic Arts Advisors)
Stationery printing Link
Rayacom Group No Data Vancouver, BC Wilson Business Solutions No Data Hamilton, ON 12/19/18 No Data Acquisition Printing & copying Link
Allegiance Fundraising Group No Data Lakewood Ranch, FL One to One  No Data Sarasota, FL 12/17/18 No Data Acquisition Direct mail marketing Link
Alliance Franchise Brands No Data Plymouth, MI RSVP Publications No Data Tampa, FL 12/14/18 No Data Acquisition Direct mail franchises Link
FutureStake No Data Gettysburg, PA New Leaf Paper No Data Walnut Creek, CA 12/12/18 No Data Acquisition Paper distribution Link
SGM Technologies No Data United Group Printing No Data Dallas, TX 12/12/18 No Data Acquisition
(Graphic Arts Advisors)
Commercial printing Link
H.I.G. Capital No Data Miami, FL Vision Integrated Graphics
(Port co. Concentric Equity)
$98.0 Bolingbrook, IL 12/11/18 No Data Acquisition
(Lincoln International)
Direct mail marketing Link
Burke Group No Data Edmonton, AB Topline Printing No Data Calgary, AB 12/10/18 No Data Acquisition Commercial printing Link
Burke Group No Data Edmonton, AB Printcor No Data Calgary, AB 12/10/18 No Data Acquisition Commercial printing Link
Cascades $3,380 Kingsey Falls, QC Urban Forest Products
Clarion Packaging
$110.0 Brook, IN
Clarion, IA
12/6/18 $37.4 Acquisition Pulp packaging Link
Fuse No Data Berkeley, IL Digital Hub No Data Chicago, IL 12/3/18 No Data Acquisition Commercial printing Link
Adams Publishing Group No Data Minneapolis, MN Watertown Daily Times
(Prop. James M. Clifford)
No Data Watertown, WI 12/3/18 No Data Acquisition
(Dirks, Van Essen)
Community newspapers Link
Adams Publishing Group No Data Minneapolis, MN Daily Jefferson County Union
(Prop. W.D. Hoard & Sons Co.)
No Data Fort Atkinson, WI 12/3/18 No Data Acquisition
(Dirks, Van Essen)
Community newspapers Link
Koenig & Bauer (KBA) No Data Wurzburg, Germany Duran Machinery No Data Istanbul, Turkey 12/1/18 No Data Acquisition Folder-gluer machinery Link


2018 December - 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:
No Chapter 11 Filings Found this Month --- --- --- --- --- --- --- --- ---
Chapter 7 Filings:
Arrow Graphics, Inc. 12/4/18 No Data 18-33681 Maryville, TN 6th Eastern TN
Knoxville
Suzanne H. Bauknight Patrick Woodside, Jr. Commercial printing


2018 December - 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
Colonial Printing 2/7/19 No Data Warwick, RI Bradford Equities White Plains, NY Dec-18 Commercial printing Link
American Printing & Envelope 1/11/19 No Data Auburn, MA None N/A Dec-18 Commercial printing Link

Thursday, December 6, 2018

The Waning Fortunes of the Time Inc. Magazines - November 2018 M&A Activity


A Thai businessman owns Fortune Magazine. 

A dot-com billionaire owns Time Magazine.


The widow of Apple’s founder owns The Atlantic Magazine.


A retail disruptor (and wealthiest person on earth) owns The Washington Post.


Never heard of Chatchaval Jiaravanon, the Thai businessman whose family controls Charoen Phokkhaphan, the largest conglomerate based in Thailand which employs over 300,000 people in over 30 countries? Neither had I until learning that he stepped up and paid $150 million for the iconic chronicle of American industry and business, Fortune Magazine. The Thai billionaire apparently jumped into the bidding when Marc Benioff, founder of software company Salesforce, switched gears and decided to buy Time Magazine instead of Fortune.

Fortune Magazine has been my window into the world of big business since I first subscribed in 1980. I’ve read every issue since, cover-to-cover. The articles in Fortune have been extraordinarily insightful and topical, the research, writing and graphic design top-notch. Even though Fortune is not focused on the smaller privately-held companies that I have owned and/or worked for, the larger companies featured in the pages of Fortune were my customers and those companies set the macro-economic trends that influenced my business life.

Over the past couple of years, as advertisers have moved their advertising budgets from the printed page to digital channels, Fortune magazine has gotten thinner, the paper lighter, and the deep journalistic dives fewer. Recent issues have featured more “sponsored” content, code for advertising disguised as an editorial piece, replete with copy that drones on about the wonders of doing business in Dubai or some other inane topic. If my subscription was not on auto-renew, I suspect that my decades-long habit of reading Fortune on my lunch break would have ended with nary a blip in my routine.

My collection of antique Fortune magazines offers an amazing journey into history; history written as it occurred. In one of the very early issues, November of 1931, the topics covered included: government intervention in farm productivity, the politics behind the growing Port of New Orleans, an accounting of war reparations from World War I, the new unemployment relief programs, the Cleveland orchestra (with color illustrations of each instrument), Soviet propaganda posters, deep sea salvage, outfitting the babies of the wealthy (after all, the magazine was named Fortune), the rising economy of Brazil, and a photo essay of Europe’s top statesmen caught in casual poses (including Mussolini scowling at his guests over coffee).

If it’s possible, the advertising might even be more interesting than the editorial: furs, furniture, clothing, top hats, horse riding kits, cruise lines, exotic travel destinations (Miami and Hawaii were exotic at that time), yachts, and fine art. These products were among the ads in the November ’31 issue, all aimed at the top earners in society. Other ads were more industrial: plugging the makers of aluminum, brass, bolts, pipes, ball bearings, cars, trucks, and cement. Banks and insurance companies were vying for attention. The back cover, clearly the most expensive advertisement in the book, featured a handsome football player and two very fashionable adoring young ladies enjoying their Camel cigarettes under the headline “something worth cheering about.”

Of special note to those of us in the printing industry, paper manufacturers such as Crane’s Bond, Gilbert Paper and Kimberly-Clark advertised often in the early issues of Fortune to reach the top echelon of American business. Fine writing paper was touted as a necessity promoting the image of a successful company. The cover of November ’31, one of my favorites, was not an illustration of a ship, a plane, a train, or a steel furnace, but rather the image portrayed was that other important driver of economic growth, the printing press, turning out an issue of The Saturday Evening Post.

Without exception, the billionaires, the new owners of these iconic American titles, have vowed to stay out of the editorial side of the enterprise. Their statements are refreshing, especially after all the thrashing about at Time, Inc. over the past several years that management was breaking down the walls between the editorial and business departments, eliminating the firewall between “church and state” that has sustained an editorially independent press. We need a new model of support for the free press, and what appears to be emerging is ownership of these publications by people who are so wealthy that they can sit by and sustain the losses incurred by these broad-based general interest publications. The notion of a billionaire-supported free press is suspect, at least in my opinion, since the century-old advertiser-supported model relied on a constantly evolving and very diverse foundation of revenue sources, none alone so powerful that they could suppress the robust independent journalism we have enjoyed for so long. The new mogul-supported model concentrates the financial support in the hands of a very select few, however well-meaning their initial intentions.

Printing and Creative Services

After its print-affirming acquisition of LSC communications, announced last month, Quad/Graphics got back on course with its “Quad 3.0” strategy, announcing the acquisition of Periscope. The acquired company appears to have all the hallmarks of an upscale, hipster, chic, creative agency in a sophisticated urban setting, complete with rooftop garden meeting area and open work spaces (lest you doubt my “hipster-chic” characterization: no less than six dogs are featured prancing around the office in the one-minute intro video on the website). The Periscope deal mirrors Quad’s September acquisition of Peppermint Warszawa, an upscale creative agency in Warsaw, Poland.

Quad took baby steps into creative digital services back in 2014 when it acquired Brown Printing as part of its “Quad 2.0” strategy of consolidating the large printer segment of the industry. In that transaction, Quad landed the digital and mobile agency Nellymoser, which Brown had previously acquired (see The Target Report: Is the Printing Industry Devolving or Evolving? – March 2013), eventually rolling Nellymoser into its homegrown BlueSoHo creative production boutique.

A much bigger step, really more of a leap, was accomplished earlier this year when Quad acquired Ivie & Associates, the Texas-based marketing production services and marketing execution company (see The Target Report: Turning a Big Ship – Quad/Graphics Acquires – February 2018). Also in line with the “Quad 3.0” strategy was the acquisition of digital marketing services company, Rise Interactive, announced in March of 2018.

Joel Quadracci, chairman of Quad/Graphics, in the press release announcing the Periscope deal, proclaimed that the acquisition will create an “integrated end-to-end marketing platform that we believe will create more value than the traditional siloed agency approach.” Of course, the big advertising agencies (and let’s not exclude the global print management companies) are not waiting around quietly while Quad conquers the higher ground on the creative process ladder. I can hear the retort coming – what could be more siloed than a large capital-intensive, heavy-machinery, industrial printing company trying to integrate with a human-intensive, young, hip, group of creatives that bring their dogs to work and walk out the door at the end of every day?

While I wouldn’t bet against Quad succeeding to carve out a space somewhere in-between the top creative agencies and hard-core industrial-strength printing, it’s clear that Quad is covering its bet on the “3.0” creative strategy with the game-changing and much larger pending acquisition of LSC Communications. When that transaction is complete, Quad will instantly vault to the number one position and become the biggest printing and publication logistics company in the US.

On a much smaller scale than Quad, Firespring, headquartered in Lincoln, Nebraska, continued its evolution into a one-stop marketing services provider with the acquisition of Evol Empire Creative. Evol, as the acquired company is known, specializes in interactive digital, website design and video production. Firespring has grown through a series of acquisitions, including the August 2016 purchase of Jacob North Media Solutions which brought significant print capacity and expertise to the group. That same month, the company acquired an online crowdfunding platform, Deposit a Gift, bringing a unique fundraising service to its focus on the non-profit sector. Firespring has its roots in printing, originating in 2015 as a mash-up of five small printing companies. Mailing services were added shortly after the initial formation of the company with the purchase of On-Time Marketing. Firespring now has more than 200 employees and appears to be delivering on the concept of what a marketing service provider can become, a creative force in its market while still maintaining a strong core print component.

Labels

Private equity interest and activity in the label printing segment remains very strong. Fortis Solutions Group, a portfolio company of Main Post Partners, announced a double header deal with the acquisition of Premier Georgia Printing and Labels located in Flowery Branch, Georgia and the Austin Label Company located in Austin, Texas. The Georgia company also produces folding cartons.

Resource Label Group, with the backing of First Atlantic Capital, acquired Spectrum Label in Hayward, California. The acquired company produces pressure sensitive labeling. Two weeks later, Resource Label Group acquired Best Label, located in Cerritos, California. Best Label also produces pressure sensitive labeling, using letterpress, flexo and digital printing processes. (For more, see The Target Report: Private Equity LOVES Labels – August 2016).



2018 November - 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
Higher Information Group No Data Harrisburg, PA Armstrong Printery No Data Harrisburg, PA 11/30/18 No Data Acquisition Printing & copying Link
Zanders-Paper
(NuCo of Terje Haglund)
No Data Bergisch Gladbach
Germany
Zanders No Data Bergisch Gladbach
Germany
11/30/18 No Data Acquisition
(DE Insolvency Sale)
Specialty papers Link
American News Company
(Port co. Chatham Asset Mngt.)
No Data Chatham, NJ The News Group
(Sub. Jim Pattison Group)
No Data Smyrna, GA 11/29/18 No Data Acquisition Magazine distribution Link
OSI Creative No Data Irvine, CA New Dimension Research No Data Melville, NY 11/29/18 No Data Asset acquisition Merchandise displays Link
Orora $3,083 Hawthorn,
Australia
Pollack Packaging $260.0 Grand Prairie, TX 11/29/18 $80.5 Acquisition Corrugated boxes & supplies Link
Sampco Companies No Data Pittsfield, MA Qualprint No Data Pittsfield, MA 11/28/18 No Data Merger
(Graphic Arts Advisors)
Commercial printing Link
Quad/Graphics $4,150 Sussex, WI Periscope No Data Minneapolis, MN 11/27/18 $132.5 Acquisition Creative services Link
PPC Flexible Packaging
(Port co. Morgan Stanley Capital)
No Data Buffalo Grove, IL Temkin International No Data Payson, UT 11/26/18 No Data Acquisition Flexible packaging Link
Firespring No Data Lincoln, NE Evol Empire Creative No Data Lincoln, NE 11/18/18 No Data Acquisition Creative services Link
Resource Label Group
(Port co. First Atlantic Capital)
No Data Memphis, TN Best Label No Data Cerritos, CA 11/15/18 No Data Acquisition Label printing Link
Penske Media No Data Los Angeles, CA Art Media Holdings No Data New York, NY 11/13/18 No Data Acquisition Magazine publisher Link
Ricoh $18,720 Tokyo, Japan ColorGATE Digital Output Solutions No Data Hanover, Germany 11/12/18 No Data Acquisition Color management software Link
Montagu Private Equity No Data London, UK Flexographic Packaging Business
(Div. Eastman Kodak)
$1,510 Rochester, NY 11/12/18 $390.0 Acquisition Flexo printing plates Link
Fortune Media Group
(Chatchaval Jiaravanon)
No Data New York, NY Fortune Magazine
(Prop. Meredith)
No Data
($2,250)
Des Moines, IA 11/9/18 $150.0 Acquisition Magazine publisher Link
BR Printers No Data San Jose, CA Endpoint Direct No Data Denver, CO 11/9/18 No Data Acquisition Direct mail marketing Link
Siebold No Data Coral Springs, FL DR Press Equipment No Data Woodridge, IL 11/5/18 No Data Acquisition Offset printing press parts Link
Digital Room
(Port co. H.I.G. Capital)
No Data Los Angeles, CA Logo Sportswear No Data Wallingford, CT 11/5/18 No Data Acquisition Promotional items & apparel Link
Resource Label Group
(Port co. First Atlantic Capital)
No Data Memphis, TN Spectrum Label No Data Hayward, CA 11/1/18 No Data Acquisition Label printing Link
Fortis Solutions Group
(Port co. Main Post Partners)
No Data Virginia Beach, VA Austin Label Company No Data Austin, TX 11/1/18 No Data Acquisition Label printing Link
Fortis Solutions Group
(Port co. Main Post Partners)
No Data Virginia Beach, VA Premier Georgia Printing and Labels No Data Flowery Branch, GA 11/1/18 No Data Acquisition Labels & folding cartons Link


2018 November - 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:
Rex Printing Company 11/20/18 No Data 18-55671 Sterling Heights, MI 6th Eastern MI
Detroit
Phillip J. Shefferly Jay S. Kalish Book & diary printing
Chapter 7 Filings:
Wet Ink Printing, Inc. 11/5/18 No Data 18-23000 Cerritos, CA 9th Central CA
Los Angeles
Sheri Bluebond Michael J. Varisco Commercial printing


2018 November - 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
Hagadone Printing Hawaii 1/11/19 No Data Honolulu, HI Hagadone Corp Coeur d'Alene, ID Nov-18 Commercial printing Link
Essentra Packaging 12/13/18 No Data Largo, FL Essentra Packaging Nottingham, UK Nov-18 Packaging & plastic card printing Link
Bartash Printing 11/30/18 No Data Philadelphia, PA None N/A Nov-18 Commercial & newspaper printing Link