Saturday, February 8, 2014

Will Facebook's "Paper" Replace the Morning Newspaper? – January 2014 M&A Activity

Printers and publishers can’t seem to get a break, or at least not the respect that is deserved by industries that have for centuries been the core transmitters of knowledge and political freedom. (I know – that’s a bit heavy, but it’s true). Facebook has announced that its latest smartphone app which is designed to personalize and replace our newspapers is named “Paper.” The app offers news feeds curated by real live human editors, divided into “sections” such as sports and food, just like a real printed newspaper. Facebook obviously chose to name its new app “Paper” to impart the credibility we accord our printed news media. Should printers and publishers be flattered by the name or upset that the next generation will reach for their smartphone to read the morning “paper”?

Paper - that basic and most fundamental substrate of our industry - was at the core of a wide variety of deals announced in January, and those deals are likely to impact future supply and pricing. Assuming that the decline in demand for printed products levels off or slows down at some point, as a result of the transactions announced, printers are likely to have less available supply and a more limited choice of suppliers to pick from when they are sourcing paper in the future.

Right now, the demand for paper continues to decline. In response, two of the largest remaining US companies that manufacture printing papers reached out to each other and plan to merge. Drowning in debt, they apparently hope to hold each other above the surface. In a deal reported as “complex” and “essentially all debt,” Verso Paper announced that it was acquiring NewPage Holdings, forming the largest manufacturer of coated printing papers remaining in the US. However the buyers, Verso, are not really buying NewPage, rather they have put together a deal structure in which Verso will provide management and other services to NewPage, but NewPage will be kept at arms’ length as a separate company. In other words, “if we make it to shore, then great, we’re partners,” but “if you drown brother, well then thanks for the fees and services, and see you at your funeral.” Could this turn out to be an example of tying two rocks together, in hopes that they will float?

The business of distributing paper is also set to complete another round of consolidation. Not too long ago, paper distributors were mostly family-owned and managed enterprises. Many of those formerly independent companies were rolled up into two competing mega-distributors, Xpedx (owned by International Paper) and Unisource (owned by Bain Capital and Georgia-Pacific). Through a series of maneuvers, Xpedx will be spun off, and then Unisource will be merged into the new entity. Although margins are paper-thin for these distribution giants, the combined entity will reportedly be able to easily handle payments on the debt planned for the new enterprise. Xpedx is projecting combined revenues for the new company in the $9 billion to $10 billion range. With reasonable debt levels, and additional product offerings that may offset the trend of declining demand for printing papers, such as wide format and digital supplies, it appears that the new company will have enough buoyancy to stay afloat.

Gould Paper, another significant player in the US paper distribution market, with $1 billion in annual sales, also got into the roll-up action in January and announced that it has acquired Texas paper distributor Bosworth Papers. Gould in turn is 51% owned by the Japan Pulp & Paper company, a global paper distributor with $6 billion in annual revenues.

There also was activity in the other “paper business” – publishing newspapers. An unnamed “independent investor group” acquired Mainstreet Communications from PE fund Brookside Group, including a cluster of local newspaper in the Sierra Nevada area of California. This follows Brookside’s sale of eight community newspaper titles to the San Diego Union Tribune, as previously reported in our November 2013 deal log. In upstate New York, the president and CEO of The Scotsman Press announced that he was acquiring the company which publishes several local community newspapers.

A community newspaper was among the increased number of bankruptcies we found that were filed in January. The Free Lance-Star Publishing Co. of Fredericksburg, Virginia, filed Chapter 11. According to articles published in the company’s signature paper, the company has been struggling to meet the covenants of its debt obligations which were incurred in the ill-timed investment in 2007 to build a state-of-the-art printing facility.

It was also the end of a long and winding road for Ovation Graphics, the mini roll-up in Texas that brought together the highly respected Branch-Smith Printing company and Motheral Printing. The two acquisitions in 2012 ended 100 years and 78 years of family ownership, respectively, of these two commercial printing firms. Whatever remains of Ovation Graphics has been handed over to the Bankruptcy Courts to manage in an involuntary Chapter 7 proceeding, instigated by five companies that got together as petitioning creditors in the case – all five are paper merchants.

2014 January - Mergers and Acquisitions in the Printing, Packaging, Paper & Related Industries  

Deal Party #1
(Surviving Entity)
($Mil )

Party #1 Address

Deal Party #2
($Mil )

Party #2 Address

Deal Structure


Gould Paper Corporation $1,000 New York, NY Bosworth Paper No Data Houston, TX 1/31/14 No Data Acquisition Paper distribution Link
Graphic Connections Group No Data Chesterfield, MO Mira Digital Publishing No Data Chesterfield, MO 1/30/14 No Data Acquisition Digital book publishing Link
Baldwin Technology No Data St. Louis, MO Web Printing Controls No Data Fairfield, IL 1/30/14 No Data Acquisition Web offset press controls Link
Decka Digital No Data Harbor Springs, MI Graphic Printing No Data Petoskey, MI 1/29/14 No Data Acquisition Printing & copying Link
(Div International Paper)
No Data Loveland, OH Unisource No Data Norcross, GA 1/28/14 No Data Merger
Paper distribution
(combined $9 to $10 Bil revenue)
Konica Minolta $9,343 Tokyo, Japan MGI Digital Graphic Technology No Data Paris, France 1/24/14 No Data Minority interest Digital printing equipment Link
William G. Veit No Data Syracuse, NY Scotsman Media Group No Data Syracuse, NY 1/23/14 No Data Management Buyout Community newspapers Link
Hood Container No Data Waverly, TN Stronghaven No Data Atlanta, GA 1/22/14 No Data Acquisition
(Mesirow Financial)
Packaging & displays Link
CCL Industries $1,650 Toronto, ON Sancoa / TubeDec $82.5 Lumberton, NJ 1/21/14 $71.0  Acquisition Labels, tubes & sleeves Link
CCL Industries $1,650 Toronto, ON Acrus-CCL No Data Santiago, Chile 1/20/14 $1.2 Purchase of Majority Interest Wine labels Link
Citypress No Data Waukesha, WI EGX Group No Data West Allis, WI 1/20/14 No Data Merger Commercial printing Link
Electronics for Imaging (EFI) $727.7 Foster City, CA SmartLinc No Data Milwaukee, WI 1/16/14 No Data Acquisition Freight tracking software Link
Martin Graphics & Printing No Data Champlain, IL W.M. Putnam No Data Bloomington, IL 1/13/14 No Data Asset Acquisition Office supplies Link
127 Summit Holdings No Data Monument, CO Summit Container Corporation No Data Monument, CO 1/6/14 No Data
(St. Charles Capital)
Corrugated packaging Link
InterFlex Group No Data Wilkesboro, NC Star Packaging No Data Atlanta, GA 1/16/14 No Data Acquisition Flexo packaging
(combined $200 Mil revenue)
PRP No Data Indianapolis, IN NPP Packaging Graphic Specialists No Data Indianapolis, IN 1/16/14 No Data Acquisition Prepress services for flexo Link
Proforma Media & Print
No Data New Braunfels, TX Advertising Concepts No Data San Antonio, TX 1/15/14 No Data Acquisition Promotional products Link
Independent Investor Group No Data San Diego, CA
Mainstreet Communications
(Portfolio co. of Brookside Group)
No Data San Diego, CA 1/8/14 No Data Acquisition Community newspapers Link
PIP Printing & Marketing
No Data Sturgeon Bay, WI Sir Speedy
No Data Green Bay, WI 1/8/14 No Data Acquisition Printing & copying Link
Schob & Schob No Data Kent, WA NCF Graphic Solutions No Data Santa Barbara, CA 1/2/14 No Data Acquisition Forms & promotional items Link
Deluxe Corporation $1,580 Shoreview, MN Destination Rewards No Data Boca Raton, FL 1/7/14 No Data Acquisition Loyalty programs Link
Book Manufacturers' Institute  No Data Palm Coast, FL Hardcover Binders International-
Library Binding Institute
No Data Palm Beach, FL 1/1/14 No Data Merger Trade associations Link
Shawmut No Data Danvers, MA HK Graphics No Data Everett, MA 1/7/14 No Data Acquisition Wide format printing Link
Simpson Print $10.0 Bloomingdale, ON Denison Print No Data Breslau, ON 1/6/14 No Data Acquisition Commercial & screen printing Link
RockTenn $9,620 Norcross, GA NPG No Data Chattanooga, TN 1/6/14 No Data Acquisition Merchandizing displays Link
RR Donnelley $10,380 Chicago, IL Esselte
(North American operations)
No Data Stamford, CT 1/6/14 $96.5 Acquisition Paper-based office products Link
Verso Paper $1,400 Memphis, TN NewPage Holdings $3,100 Miamisburg, OH 1/6/14 $1,400 Acquisition
Printing papers Link
Sun Chemical $3,500 Parsippany, NJ Tintas/Sinclair Group $100.0 Medellin, Columbia 1/3/14 No Data Purchase of shares Printing inks (Latin America) Link

2014 January - Bankruptcy Filings in the Printing, Packaging, Paper & Related Industries

Filing Party

($Mil )

Case #

Filing Party Address


Region & City


Attorney for Debtor

Chapter 11 Filings:
The Free Lance-Star Publishing Co. of Fredericksburg, Va. 1/23/14 No Data 14-30315 Fredericksburg, VA 4th Eastern VA
Kevin R. Huennekens Paula S. Beran Regional newspaper & radio stations
David J. Thompson Mailing Corporation 1/21/14 No Data 14-00237 Bloomsburg, PA 3rd Middle PA
John J. Thomas William J. Byrne Mailing services
Inc. Graphic Impressions NW 1/13/14 No Data 14-10225 Seattle, WA 9th Western WA
Marc Barreca Denice E. Moewes Commercial printing
Chapter 7 Filings:
Dyna Ink, Ltd. 1/28/14 No Data 14-02590 Woodbridge, IL 7th Northern IL
Donald R. Cassling John J. Lynch  Commercial printing
Macadam/Cage Publishing, Inc. 1/17/14 No Data 14-30071 Fairfax, CA 9th Northern CA
San Francisco
Dennis Montali Eric A. Nyberg Book publishing
Ovation Graphics, LLC 1/16/14 No Data 14-40248 Fort Worth, TX 5th Northern TX
Fort Worth
D. Michael Lynn Pro Se Commercial printing
(Involuntary filing)
Geske's Print Shop, LLC 1/9/14 No Data 14-30050 El Paso, TX 5th Western TX
H. Christopher Mott Carlos A. Miranda, III Commercial printing
Decker Enterprises, Inc.
(DBA House of Printing)
1/8/14 No Data 14-20007 Casper, WY  10th Wyoming Peter J. McNiff Wendy S. Owens  Commercial printing
Power Print Consulting, LLC 1/2/14 No Data 14-50001 Fairfield, CT 2nd Connecticut
Alan H.W. Shiff  Chris R. Nelson  Print broker

2014 January - Non-Bankruptcy Closures in the Printing, Packaging, Paper & Related Industries

Closed Company / Facility

Date of Closure
($Mil )

Closing Address
Related Party Related Party
Date Closure Public


Quad Graphics - Printing Facility Mar-14 Marengo, IA Quad Graphics Sussex, WI  1/23/14 Formerly Vertis facility Link
Quad Graphics - Printing Facility Jun-14 Pomona, CA Quad Graphics Sussex, WI  1/23/14 Formerly Vertis facility Link
ASG - Printing plant 3/31/14 No Data Indianapolis, IN ASG
(formerly AGI-Shorewood)
Stamford, CT 1/15/14 Packaging & labels Link