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

Sunday, May 8, 2016

A Puzzling Future for Specialty Magazines – April 2016 M&A Activity




Kappa Media Group, the publishing arm of centa-millionaire Nicholas Karabot’s Pennsylvania-based business empire, has doubled down on its investments in the printing industry with the acquisition of Vanguard Printing in Ithaca, New York. Vanguard is a web and sheetfed offset printing company with a focus on printing specialty magazines, as well as catalogs and books. The acquisition adds significant printing capacity to Karabots’ portfolio which includes Kappa Graphics, a similarly equipped printing company located in northeast Pennsylvania, not far from Ithaca.

The source of Karabots’ fortune was selling printing and printing supplies to the publisher of Reader’s Digest. He subsequently bought a publishing company that issues a stream of specialty titles including game, crossword and puzzle books, as well as off-beat titles in wrestling and astrology; recently adding adult coloring books (not “adult” topics, just art that is more difficult-to-color). Other businesses in the portfolio include fulfillment services for publishers, a golf resort, vineyards and real estate investments.

No reference to Karabots, the self-proclaimed “bad kid” who belonged to a gang growing up in the South Bronx, would be complete without mentioning his philanthropic activities in the Philly metro area he now calls home: endowing a wing to the Children’s Hospital of Philadelphia, significant donations to the Philadelphia Museum of Art, and a $10 million gift to the Franklin Institute where children learn about science and technology. It would appear that Vanguard Printing has landed in good hands.

In contrast to the success of Kappa Media, another publisher of printed specialty magazines, Harris Publications, threw in the towel and called it quits, shuttering its 75 titles with nary any advance notice. Based in New York City, Harris produced magazines catering to highly focused target audiences including custom automotive (Rides), urban star gossip (Juicy), gardening (Container Gardening), guns (16 titles, including such nuanced specialties like Combat Handguns and Tactical Weapons), pets (Dog News), and more. In announcing the closure, the owner clearly took aim at and blamed digital media and the ongoing disruption in the newsstand distribution system for the company’s failure.

Time Inc. spun off the This Old House brand, including the printed magazine, television production, digital content and brand licensing. This Old House magazine is reported to reach almost 1 million subscribers, and the website attracts 5.5 million unique visitors each month, including 2.9 million via mobile devices. Private equity firm TZP Group, based in New York, provided the capital, backing newly appointed CEO of This Old House, Eric Thorkilsen, in his bid to carve This Old House out of Time Inc.

Packaging

Inland, a multi-process packaging printing company located in La Crosse, Wisconsin, announced the acquisition of Valley Label, a flexible packaging, shrink and roll-fed label printer. Inland serves the food and beverage industry and the purchase of Valley Label expands the company’s position in those markets. This marks the second time in less than a year that Inland has executed on its strategy to grow by acquisition, as defined by CEO Mark Glendenning in September 2015 in his comments about the purchase of Monet Graphics (see The Target Report – September 2015).

Chicago-based Svoboda Capital Partners added a third location to its packaging platform company with the acquisition of flexo and digital prime label printer Hyde Park Label in Austin, Texas. Beginning with the 2012 acquisition of the initial platform company, M.E.I. Labels, located in the Tulsa, Oklahoma area, Svoboda added Dallas-area TVC Label in 2013 and rebranded the group as Infinite Packaging.

Amcor, one of several large global roll-ups in the packaging industry, announced the acquisition of Alusa, a major player in the South American market. Amcor, based in Australia, paid $435 million for Alusa which reported $375 million in revenues and 13.6% EBITDA margins, approximately $51.2 million. The price paid equates to 1.16 times revenues, 8.5 times EBITDA, illustrating once again the higher multiples being paid for larger companies in the packaging segment, especially those that significantly further the acquirer’s strategic position.

Commercial Printing

There were several smaller deals announced in the commercial printing segment, as waning demand for generalized printing services continues to drive consolidation. Of special note, however, privately-held Taylor Corporation announced the acquisition of Staples Print Solutions. With its origins and roots deep in the printing industry, privately-held Taylor has revenues in excess of $2 billion and was the winner in the bidding last year for the assets of bankrupt Standard Register (see The Target Report – June 2015).

It’s unclear at this point how deep Taylor’s influence will reach into Staples at the individual store level, but it does appear that Staples is jettisoning its centralized printing capabilities as it focuses on winning regulatory approval to acquire its competitor in the office supply business, Office Depot.



2016 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
Amcor $6,887 Victoria, Australia Alusa $375.0 Santiago, Chile 4/28/16 $435.0 Acquisition Flexible packaging Link
Trans-Optique (Div. PDI Group)
(PDI Large Format Solutions)
No Data Montreal, QC Imagerie
LVP.ca
No Data Broisbriand, QC
Terrebonne, QC
4/27/16 No Data 3-way merger Large format printing Link
Avery Dennison $5,970 Glendale, CA Mactac (European division)
(Port co. Platinum Equity)
$170.0 Soignies, Belgium 4/27/16 $228.1 Acquisition Pressure sensitive papers Link
Clash Graphics No Data Atlanta, GA Flyers ASAP No Data Atlanta, GA 4/26/16 No Data Acquisition Commercial printing Link
OpenText $1,830 Waterloo, ON HP - Engage Software $90.0
($101,700)
Palo Alto, CA 4/22/16 $170.0 Asset Acquisition Content mngt. software Link
Birdland Acquisition No Data Stockbridge, MA New England Newspapers
(Div. Digital First Media)
No Data Denver, CO 4/21/16 No Data Acquisition Community newspapers Link
Apex Technology No Data Zhuhai, China Lexmark International $3,550 Lexington, KY 4/19/16 $3,600 Acquisition Printing devices Link
Taylor Corp. No Data Mankato, MN Staples Print Solutions
(Div. Staples)
No Data
($2,145)
Framingham, MA 4/18/16 No Data Asset Acquisition Commercial printing facilities Link
Follet $2,600 Westchester, IL Baker & Taylor $1,000 Bridgewater, NJ 4/18/16 No Data Acquisition
(Sagent Advisors)
Book distribution Link
K. McKnight-Goelz No Data Odessa, FL ABCO Graphics & Printing No Data Odessa, FL 4/14/16 No Data Acquisition Commercial printing Link
GateHouse Media
(Div. New Media Investment)
$1,200 Pittsford, NY Journal Multimedia No Data Harrisburg, PA 4/13/16 $18.0 Acquisition Business & trade publishing Link
Treasure Valley Litho No Data Boise, ID Joslyn & Morris Printing No Data Boise, ID 4/12/16 No Data Acquisition Commercial printing Link
Infinite Packaging
(Port co. Svoboda Capital)
No Data Lewisville, TX Hyde Park Label No Data Round Rock, TX 4/11/16 No Data Acquisition Label printing Link
American Press No Data Lake Charles, LA Southwest Daily News
(Div. GateHouse Media Group)
 No Data Sulphur, LA 4/10/16 No Data Acquisition
(Dirks, Van Essen)
Community newspapers Link
Inland No Data La Crosse, WI Valley Label No Data Neenah, WI 4/6/16 No Data Acquisition Flexible packaging Link
Novus Imaging No Data Moultenboro, NH Redwood Technologies No Data Moultonboro NH 4/5/16 No Data Acquisition Inkjet technology design Link
Kappa Media No Data Fort Washington, PA Vanguard Printing No Data Ithaca, NY 4/4/16 No Data Acquisition Publication & catalog printer Link
Dr. Graphx No Data Chicago, IL Langer Printing No Data Chicago, IL 4/4/16 No Data Acquisition Pad printing Link
Times Printing No Data Swoyersville, PA PDQ Print Center No Data Taylor, PA 4/1/16 No Data Acquisition
(Graphic Arts Advisors)
Commercial Printing Link
TZP Growth Partners No Data New York, NY This Old House
(Div. Time, Inc.)
No Data
($3,110)
New York, NY 4/1/16 No Data Acquisition Magazine Publishing Link


2016 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:
No Chapter 11 Filings Found this Month --- --- --- --- --- --- --- --- ---
Chapter 7 Filings:
Readmond Printing, Inc. 4/19/16 No Data 16-10133 Ashland, KY 6th Eastern KY
Lexington
Gregory R. Schaaf Jeffrey D. Tatterson Commercial printing


2016 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
Harris Publications May-16 No Data New York, NY None N/A 4/28/16 Specialty magazine publisher Link
RR Donnelley  - Printing facility Aug-16 No Data Gresham, OR RR Donnelley Chicago, IL 4/27/16 Directories & commercial printing Link
Northstar Direct May-16 No Data Manchester, NH None N/A 4/22/16 Direct mail printer & lettershop Link
Wickliffe Mill 7/1/16 No Data Wickliffe, KY Verso Paper Memphis, TN 4/6/16 Coated printing papers Link
Climax Packaging Apr-16 No Data Lowville, NY None N/A 4/2/16 Folding cartons Link