Thursday, June 7, 2018

Corrugated Gets Glam - May 2018 M&A Activity


The CEO of DS Smith, commenting on the company’s most recent acquisition in the corrugated segment, noted “This is an exciting and fast-paced environment where we are experiencing strong momentum.” Really? Could he actually be referring to that ubiquitous, plain, brown, and most of all, simple material, used in the corrugated box and retail display segments of the printing industry?

DS Smith, the London-based global powerhouse in the containerboard, corrugated packaging and retail display segments, announced its second acquisition in the US market within the last year. The company now has a total US presence of 23 facilities and more than 2,000 employees. The most recent acquisition, Corrugated Container Corporation (“CCC”) of Roanoke, Virginia, brings additional expertise in corrugated box design and manufacturing, as well as a core competency in retail displays. CCC will be piggy-backed on and integrated with DS Smith’s much larger acquisition, announced last year, of Virginia-based Interstate Resources.

With that acquisition of Interstate Resources, DS Smith accomplished in one fell swoop what would have taken years to build out organically. That strategically important deal instantly established a US platform for DS Smith with 19 stateside facilities and 1,500 employees. At the time of the acquisition, Interstate Resources reported revenues of $618 million. DS Smith paid a total of $1.146 billion for 80% of the outstanding equity, suggesting a total enterprise value of $1.432 billion, or otherwise stated, an astounding 2.32 times trailing revenue. Although EBITDA figures of the acquired company were not disclosed by DS Smith, one analyst estimated the multiple paid at 13.1 times trailing EBITDA. Clearly a high-water valuation driven by the strategic goals of a well-heeled buyer.

On a smaller scale, Green Bay Packaging acquired Wisconsin Packaging. The acquired company operates a corrugated sheet plant and specializes in corrugated packaging and retail display. Green Bay Packaging, itself an active acquirer over the past several years, now has manufacturing facilities in 14 states.

Two countervailing trends are driving the deal activity in the corrugated segment of the industry. The most obvious driver is the “Amazoning” of the retail business. A friend of mine who lives in a 400-unit apartment building has remarked that the apartment complex’s hallways are lined with boxes at the end of each day, the result of online shopping deliveries. The recycling bins in the basement are clogged with flattened corrugated cartons.

On the other hand, bricks and mortar stores work to compete with the online juggernaut. Brands are constantly refreshing their in-store presence with new, more complex and multi-dimensional retail displays. Today’s stores are awash in floor stickers, decorated windows, and multi-media (sound, light, scents, etc.), alongside the old standby, corrugated retail displays. Those displays are still a cost-effective method to change out the retail space. It’s all part of the “experiential” retail environment.

Either way – online or in-store, corrugated products are in demand.

Commercial Printing and Diversified Services

Traxium, an up-and-coming Midwest roll-up in the commercial printing segment, has picked up steam. The company announced two new acquisitions, Watt Printers and Great Lakes Integrated, both in Cleveland, Ohio. Owners of commercial printers active in the industry groups will recognize Great Lakes as one of the pioneers in the transition of many commercial printing companies to marketing service providers, offering fulfillment and marketing services in addition to printing. The Traxium brand was launched in November 2016 when the owner acquired Printing Concepts, also in Ohio. The plan is to consolidate the print operations in the current Watt facility, while maintaining the separate Great Lakes fulfillment operation.

LSC Communications announced two transactions, continuing the steady drumbeat of deals for the company since being spun out of R.R. Donnelley in October 2016 (all told, we count at least eight acquisitions and two divestitures for LSC since its formation).

When LSC was split off, it was our opinion, shared by other industry analysts, that it was odd that the print logistics business was not originally included in the assets allocated to LSC. The postal optimization services in the logistics unit would logically have been more valuable to the publication printing plants which went to LSC in the split. LSC had apparently solved the problem of not having a logistics unit with the purchases, first of Fairrington Transportation (See The Target Report - Transformation and Rebirth), and subsequently of The Clark Group. Despite the two acquisitions, LSC has now announced the purchase of RRD’s Print Logistics business, which it will combine with Fairrington and The Clark Group. LSC will now have transportation and postal optimization capabilities exceeding even that of its former self within the larger R.R. Donnelley of yore.

LSC made another move to rationalize its print production assets, shedding its retail inserts business, selling the business and related production facilities to Trend Offset. Trend is headquartered in California, with additional plants in Texas and Florida. In the earlier divestiture, in September of 2017, LSC sold off its book components company, Moore-Langen Printing, which was acquired by Phoenix Color, a commercial, packaging and book printer owned by ALJ Regional Holdings.

Brand Automation

While we accept that it’s likely we will see self-driving vehicles on our roads in the near future, we often hear that some “soft skill” tasks would seemingly be beyond the grasp of automation. For example, the creation of a new logo to brand your startup company has been the domain of highly-trained and creative graphic designers. No longer; Deluxe Corporation announced the acquisition, for $43 million in cash, of LogoMix. The Boston-based online service uses proprietary artificial intelligence capabilities to offer clients self-service automated logo and branding design. The automated logo is purchased at a nominal price, delivered electronically, and instantly available for printing on business cards and promotional items, and for use in marketing campaigns (automated campaigns, of course).



2018 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
Release
Green Bay Packaging No Data Green Bay, WI Wisconsin Packaging No Data Fort Atkinson, WI 5/31/18 No Data Acquisition Retail display & packaging Link
Association of National Advertisers (ANA) No Data New York, NY Data & Marketing Association
(DMA)
No Data New York, NY 5/31/18 No Data Acquisition Trade association Link
Tronc $1,520 Chicago, IL The Virginian-Pilot Media Co's.
(Prop. Landmark Media Enterprises)
No Data Norfolk, VA 5/29/18 $34.0 Acquisition Regional newspapers Link
Nine Dragons Paper No Data Hong Kong ME & WI Paper Mills
(Dive Catalyst Paper)
$2,020 Richmond, BC 5/25/18 $175.0 Acquisition Paper mills Link
DS Smith $7,016 London, UK Corrugated Container Corp No Data Roanoke, VA 5/22/18 No Data Acquisition Retail display & packaging Link
CCL Industries $4,920 Toronto, ON Nortec International $9.6 Tel Aviv, Israel 5/22/18 $9.0 Acquisition Label printing Link
Perfect Finishing No Data Clifton, NJ 21st Century Finishing No Data Saddle Brook, NJ 5/22/18 No Data Acquisition
(Graphic Arts Advisors)
Bindery services Link
ABN AMRO Participaties No Data Amsterdam,
Netherlands
MPS Systems
(Port co. Braver Investments)
No Data Arnhem,
Netherlands
5/17/18 No Data Acquisition Flexographic presses Link
Mitchell's Speedway Press No Data Oswego, NY Phoenix Press No Data Phoenix, NY 5/15/18 No Data Acquisition Printing & copying Link
Gannett $3,100 McLean, VA WordStream No Data Boston, MA 5/10/18 $150.0 Acquisition Online advertising software Link
Deluxe $1,970 Shoreview, MN LogoMix No Data Boston, MA 5/9/18 $43.0 Acquisition Branding design & products Link
Traxium No Data Stow, OH Watt Printers No Data Cleveland, OH 5/8/18 No Data Acquisition
(New Direction)
Commercial printing Link
Traxium No Data Stow, OH Great Lakes Integrated No Data Cleveland, OH 5/8/18 No Data Acquisition
(New Direction)
Commercial printing Link
Grimco No Data Fenton, MO Pioneer Supply No Data Cinnaminson, NJ  5/3/18 No Data Acquisition Sign & screen print supplies Link
Ennis $370.2 Midlothian, TX  Allen-Bailey Tag & Label $12.0 Caledonia, NY 5/3/18 No Data Acquisition Tag & label printing Link
LSC Communications $3,710 Chicago, IL Print Logistics Business
(Div R.R. Donnelley)
No Data
($6,940)
Chicago, IL 5/2/18 No Data Acquisition Print & mail logistics Link
Trend Offset Printing $300.0 Los Alamitos Retail Insert Business
(Div. LSC Communications)
No Data
($3,710)
Chicago, IL 5/2/18 No Data Acquisition Retail newspaper inserts Link
ProAmpac
(Port co. PPC Partners)
No Data Cincinnati, OH Gateway Packaging
(Port co. Saw Mill Capital)
No Data White House, TN 5/1/18 No Data Acquisition Multi-wall packaging Link
Supremex $158.5 LaSalle, QC Groupe Deux Printing (G2)
(Inc. Pharmaflex Labels div.)
$12.0 Laval, QC 5/1/18 $11.6 Acquisition Folding cartons & labels Link


2018 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:
No Chapter 11 Filings Found this Month --- --- --- --- --- --- --- --- ---
Chapter 7 Filings:
BMP Media Holdings, LLC 5/21/18 No Data 18-11515 New York, NY 2nd Southern NY
New York
Mary Kay Vyskocil Sanford Philip Rosen Magazine publishing
Reliable Bookbinders Limited 5/14/18 No Data N/A Scarborough, ON N/A N/A N/A PwC - Trustee Perfect binding


2018 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
One Source Communications 6/13/18 No Data Whippany, NJ None N/A May-18 Commercial printing
(Managed wind-down by Graphic Arts Advisors)
Link
Printworks 7/12/18 No Data Edmonton, AB None N/A May-18 Commercial printing Link
Hooven-Dayton  7/10/18 No Data Miamisburg, OH Branford Group Branford, CT 5/29/18 Labels & flexible packaging Link

Monday, May 7, 2018

Getting Flexible in Your Middle Years - April 2018 M&A Activity


A visitor to TC Transcontinental’s website is now greeted with the opening line, “TC Transcontinental is a leader in flexible packaging in North America …” That’s a bold statement from a company that has managed to transform itself in just four years from primarily a publication and commercial printer, with no packaging experience, to become a powerhouse in the flexible packaging segment. TC’s latest acquisition of Coveris Americas, a billion dollar flexible packaging printing company, is a casebook study of executing a well-defined strategic transformation. The company has acquired an adjacent expertise (building on its core competency in roll-based printing) learning to manufacture flexible packaging while divesting assets no longer deemed essential to the new vision of the company’s future.

The acquired company, Chicago-based Coveris Americas, was part of the larger Coveris Holdings group, a portfolio company owned by Sun Capital Partners, which itself was formed in 2013 when Sun Capital combined five packaging companies together; the US-based company Exopack formed the core and basis for the roll-up. In 2017, Sun Capital announced that it was splitting Coveris Holdings into four units and launched the sale process for the Americas unit which operates 21 production facilities, located primarily in the Americas, UK and Australasia. During its ownership by Sun Capital, Coveris Americas acquired a shrink sleeve printing company in Ecuador, as well as flexible packaging companies in Guatemala and New Zealand. The combined companies, merged and tidied-up into one cohesive unit by Sun Capital, was ready-made for TC’s next and largest step into the flexible packaging market. 

This latest acquisition is the sixth in the implementation of TC’s strategic plan to develop a robust position in the market for flexible packaging, clearly articulated by the CEO in March of 2014 (See The Target Report – March 2014). The company has subsequently been laser-focused on achieving its goals, reporting that with this latest deal, on a going-forward basis, packaging will represent 48% of the company’s revenue, more than any of the company’s traditional service segments such as retail-related services (27%), Newspapers (7%), or magazines and books (7%). 

Updated table of TC Transcontinental acquisitions, highlighting recent 10.3 x EBITDA purchase price.

Over the same time period during which TC built out its flexible packaging unit, beginning in 2014, as we have noted in the Target Report, TC completed six divestitures, all of which were traditional printing and newspaper assets. When it embarked on its new path forward in 2014, the printing division had 27 printing plants. At the end of 2017, the division had 18 plants. During that same time period, operating earnings in the printing division increased from C$253 million to C$295 million.

Table of TC divestitures during same time period, highlighting recent sale of 30 titles.

























Private equity-backed ProAmpac is also building out a network of flexible packaging plants, recently buying Rochester, NY-based Pactech Packaging. The acquired company specializes in fitting spouts and dispensers to flexible packaging in a clean environment and serves medical and consumer product markets. ProAmpac is itself the product of a merger between Ampac and Prolamina in 2015, engineered and backed by Wellspring Capital. Wellspring hung in there for one acquisition and then flipped ProAmpac to the Pritzker Capital Group (See The Target Report – Moving Pieces Around on the PE Chessboard). Pritzker, now operating under its new moniker PPC Partners, immediately embarked on an aggressive acquisition campaign, having completed five deals prior to the purchase of Pactech. The company now has 28 manufacturing facilities, mostly in the US, with additional locations in Europe and Southeast Asia.

It’s clearly a hot market for deals in flexible packaging segment, with TC breaking into the double-digit range, when it priced Coveris Americas at 10.3 times EBITDA to emerge as the winner in the sale process for Coveris Americas. While we won’t know what went on behind the scenes in that process, we can surmise by the result that it’s likely that several bidders were involved. TC obviously concluded that this was a unique opportunity and acted aggressively to take a significant step forward to realize its long-term strategy. TC has proven itself to be agile in its “middle age,” adding new skills and shedding unwanted weight, ready for the next stage of its corporate life.

Commercial Printing and Diversified Services

Drummond, a diversified provider of printing and related services headquartered in Jacksonville, Florida, announced its fourth acquisition in the Atlanta metro region, buying ProGraphics. The acquired commercial printer will become the new base of Atlanta operations for the company as it executes on its regional expansion strategy, establishing a strong position in the vibrant Atlanta area.

Logan Marketing Group, based in New Jersey, acquired IBS Direct in King of Prussia, Pennsylvania. Logan Marketing plans call for IBS Direct to be the platform upon which it will build a direct marketing company, specializing in direct mail, collateral and free-standing inserts. Logan also owns Innovative Fulfillment & Mail, a niche company serving the art market with printing, framing, mailing and fulfillment.

Walker360 acquired Seek Publishing which prints and markets several products lines, including greeting cards and gift items that evoke nostalgia for places and times past. Walker360 is a diversified graphic services company that offers creative services, including marketing programs specifically designed for in-home service contractors. Walker360 is headquartered in Montgomery, Alabama, and has an additional location in Atlanta, Georgia.

New London Communications, in Alpharetta, Georgia, expanded its services into specialty window graphics with its purchase of Coolscreen Graphics, nicely piggy-backing on New London’s expertise in wide-format, interior signage and dye-sublimation printing expertise. New London was formerly a portfolio company of Valesco Industries, acquired by the current management team in a buyout in 2016.

Calise Partners, an advertising agency in Dallas, purchased design and print management company Printabilities, also located in Dallas. The acquired company brings web-to-print technology to its new parent. Myers Printing in Kentucky acquired nearby Feeback Printing, in a tuck-in transaction ending the independence of Lexington’s oldest continuously operating commercial printing company. The seller’s wife, commenting on the sale, noted that “Herbie is 84 and still working - we needed a rest.”




2018 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
Platinum Equity No Data Beverly Hills, CA Document Messaging Technologies
(Div. Pitney Bowes)
No Data Stamford, CT 4/30/18 $361.0 Acquisition
(Goldman Sachs)
Print & mail services Link
TransMet Holdings No Data Montreal, QC Montreal (21) & Quebec (8) titles
(Prop. Transcontinental)
No Data Montreal, QC 4/27/18 No Data Acquisition Metro & regional newspapers Link
Logan Marketing Group No Data Hamilton, NJ IBS Direct $55.0 King of Prussia, PA 4/25/18 No Data Acquisition
(Griffin Financial)
Direct mail printing Link
Ogden Newspapers No Data Wheeling, WV The Standard Examiner
(Prop. Sandusky Newspaper Group)
No Data Ogden, UT 4/23/18 No Data Acquisition Regional newspaper Link
Black Press Media No Data Victoria, BC Alaska Titles (2)
(Prop. New Media Investment)
No Data Juneau, AK 4/19/18 No Data Acquisition
(Dirks, Van Essen)
Local newspapers Link
Calise Partners No Data Dallas, TX PrintAbilities No Data Dallas, TX 4/17/18 No Data Acquisition Print management Link
Avery
(Div. CCL Industries)
$4,760 Toronto, ON Imprint Plus $12.7 Richmond, BC 4/12/18 $19.9 Acquisition Name badges & signage Link
Walker360 No Data Montgomery, AL Seek Publishing No Data Birmingham, AL 4/12/18 No Data Acquisition Specialty printed products Link
GateHouse Media
(Div. New Media Investment)
$1,340 Pittsford, NY Akron Beacon Journal
(Prop. Black Press Group)
No Data Akron, OH 4/11/18 $16.0 Acquisition Regional newspaper Link
PagePath No Data Plano, IL Printer's Plan (SoftUSE) No Data Cockeysville, MD 4/11/18 No Data Acquisition MIS system for printing Link
ProAmpac
(Port co. PPC Partners)
No Data Cincinnati, OH Pactech Packaging No Data Rochester, NY 4/10/18 No Data Acquisition Flexible packaging Link
Meridian Printing No Data East Greenwich, RI Barrington Printing No Data Cranston, RI 4/5/18 No Data Acquisition Commercial printing Link
Mohawk Fine Papers No Data Cohoes, NY Crane Stationery No Data North Adams MA 4/5/18 No Data Acquisition Stationery printing Link
Future Publishing No Data London, England NewBay Media No Data New York, NY 4/4/18 No Data Acquisition Specialty publishing Link
MaineToday Media No Data Camden, ME The Portland Phoenix No Data Portland, ME 4/3/18 No Data Half Interest Community newspaper Link
Myers Printing No Data Lexington, KY Feeback Printing No Data Lexington, KY 4/3/18 No Data Acquisition Commercial printing Link
Drummond No Data Jacksonville, FL ProGraphics No Data Atlanta, GA 4/3/18 No Data Acquisition Commercial printing Link
LSC Communications $3,711 Chicago, IL TriLateral No Data Cumberland, RI 4/3/18 No Data Acquisition Book distribution logistics Link
New London No Data Alpharetta, GA Coolscreen Graphics No Data Atlanta, GA 4/2/18 No Data Acquisition Window graphics Link
Transcontinental $1,510 Montreal, QC Coveris Americas
(Port co. Sun Capital Partners)
$966.0 Chicago, IL 4/2/18 $1,320 Acquisition Flexible packaging Link


2018 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:
No Chapter 7 Filings Found this Month --- --- --- --- --- --- --- --- ---


2018 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
Century Graphics 6/6/18 No Data Phoenix, AZ None N/A Apr-18 Commercial printing Link
The Flyer 5/30/18 No Data Tampa, FL None N/A Apr-18 Newspaper printing Link
Microera Printers 5/30/18 No Data Rochester, NY None N/A Apr-18 Commercial printing Link
JMH Printing 5/3/18 No Data Grand Prairie, TX None N/A Apr-18 Commercial printing Link
Printworx 4/26/18 No Data Castroville, CA None N/A Apr-18 Commercial printing Link