Monday, January 2, 2012

Major US Newspaper Publisher Files Bankruptcy – December 2011 M&A Activity

December 2011 was an active month for dealmakers in the printing industry. The thirteen deals that made it onto The Target Report this month illustrate the breadth of the industry and clearly show the increasing integration of digital technology with traditional print. In a double-header for the print MIS community, two giants in the industry, HP and EFI, each announced on the same day, separate acquisitions of German software companies. Both acquired companies offer front office MIS software systems that also drive automation in the print production processes. In the case of EFI, the acquisition of Alphagraph continues its long standing strategy of acquiring print-related MIS systems and integrating the acquired user base into its family of surviving MIS software offerings. (Still unknown - will the Alphagraph software platform be one of the long term survivors at EFI?) In the case of HP’s acquisition of Hiflex, this move by a primarily digital player (as relates to its print offerings) may represent the first serious competition to the hegemony of EFI in the commercial print MIS space. We think that it will be very interesting to watch as HP digests the Hiflex acquisition and reveals its strategy in this space.

If there was ever any doubt that enterprise valuations are flashing a bright green light indicating that digital online media will be dominant in the future, go no further than Vista’s acquisition of Webs Inc. in December. Webs is forecasting only $9 million of revenue for 2011 and Vista is paying $117.5 million for the company ($100Mil is in cash!). In other words, Vista (itself a testament to the power of the internet to change the world of printing) paid more than 13x future sales! In another nod to the integration of commercial print with digital media, albeit on a much smaller scale, Excelsior Printing in western Massachusetts has acquired the assets of Berkshire Information Systems and established a new company, Excelsior Integrated, to provide various e-commerce services. Who says an old line printing company (100+ years in business) can’t evolve into the digital age?

In other notable transactions, Quartier Printing in New York State is back on The Target Report for the second month in a row, guided in in its acquisition efforts by the folks at the NAPL. TouchPoint Print Solutions in Illinois acquired Ginny’s Printing in Austin, Texas. Are we witnessing the birth of the next CGX now that TouchPoint has already acquired seven operating companies?

Also announced, but not closed (and hence not yet listed on The Target Report), in December, Forsyth Capital Investors has agreed to acquire Baldwin Technology which supplies process automation equipment and related consumables for the print media industry. It’s another sign that the financial experts in private equity are finding value in the print and related industries.

It was a “slow” month for bankruptcies in the printing industry, and we could not find one printer that filed in December, unless you count the commercial printing services provided by the various subsidiaries of Lee Enterprises, Inc., a major US newspaper publisher. The bankruptcy of Lee Enterprises, and its 34 related companies that filed bankruptcy on the same day, is sure to have some repercussions in the paper and other industries supplying this company that publishes 52 daily newspapers in 23 states, plus more than 300 specialized and weekly publications. The Lee Enterprises companies include the famous Pulitzer papers, which it acquired in 2005. There is sure to be a lot of ink used to report on this case and its aftereffects!

2011 December - Mergers and Acquisitions in the Printing, Packaging, Paper & Related Industries
Deal Party #1
(Surviving Entity)
Pre-Deal Revenues ($Mil )Party #1 AddressDeal Party #2Pre-Deal Revenues ($Mil )Party #2 AddressDate Deal PublicDeal Value ($Mil)Deal Structure
NotesPress Releases
Imagine!$157.0Minneapolis, MNDigiGraphicsNo DataMinneapolis, MN12/22/11No DataAcquisitionLarge format graphics.Link
Quartier PrintingNo DataEast Syracuse, NYGraphics Plus PrintingNo DataCortland, NY12/21/11No DataNot Disclosed
Offset, screen & embroidery.Link
Webs$9.0Silver Spring, MD12/19/11$117.5Acquisition$100Mil cash + $17.5Mil VPRT.Link
ArborOakland GroupNo DataRoyal Oak, MITri-Color PhotographicNo DataRoyal Oak, MI12/9/11No DataAcquisition
(New Direction)
Photo & large format.Link
Riverside Acquisition GroupNo DataWestport, CTCom-Pak ServicesNo DataMoorestown, NJ12/7/11No DataAssets AcquisitionDirect marketing servicesLink
Pemcor Printing$16.5Lancaster, PALaser Imaging Systems$6.0Pittsburgh, PA12/7/11No DataAcquisitionTranspromo, Tags, VDPLink
Pemcor Printing$16.5Lancaster, PATypecraft Press$5.5Pittsburgh, PA12/7/11No DataAcquisitionColdset Web, Sheetfed, MailingLink
Electronics for Imaging (EFI)$5,040Foster City, CAAlphagraph Team GmbHNo DataEssen, Germarny12/6/11No DataAcquisitionMIS & ERP Software for PrintersLink
Hewlett Packard (HP)$127,400Palo Alto, CAHiflex SoftwareNo DataAachen, Germany12/6/11No DataAcquisitionMIS & Web-to-Print SoftwareLink
Excelsior Printing
(Excelsior Integrated)
No DataNorth Adams, MABerkshire Information SystemsNo DataLee, MA12/5/11No DataAssets AcquisitionFormed Newco to buy assetsLink
IWCO DirectNo DataChanhassan, MNDGI ServicesNo DataSwedesboro, NJ12/5/11No DataAssets AcquisitionDirect marketing servicesLink
TouchPoint Print SolutionsNo DataOak Brook, ILGinny's PrintingNo DataAustin, TX12/2/11No DataAcquisitionOffset, Digital & FulfillmentLink
No DataDallas, TXImage ReproductionsNo DataDallas, TX12/1/11No DataMergerOffset, Digital & Wide FormatLink

2011 December - Bankruptcy Filings in the Printing, Packaging, Paper & Related Industries
Filing PartyDate Case FiledPre-Petition Revenues ($Mil )Case #Filing Party AddressCircuitRegion & CityJudgeAttorney for DebtorNotes
Lee Enterprises, Inc.12/12/11$756.111-13918Davenport, IA3rdDelawareKevin GrossDonald J. Bowman, Jr.52 Newspapers in 23 States, com printing.