Monday, January 6, 2014

Is our Forecast for the Printing & Related Industries on Target? – December 2013 M&A Activity

Do the transactions in the printing and related industries during the past year provide a view into what we can expect in 2014? We went back through our deal logs from 2013, analyzed the transactions and identified several trends that I believe are likely to continue and/or accelerate over the next year. Predicting the future is always a risky endeavor, however using the data from the past year gives me confidence that these trends will show up in The Target Report in 2014:

Consolidation of Commercial Printers Continues at Brisk Pace. This may be the biggest “no-brainer” on my list, given the steady decline in demand for traditional commercial printing services. As reported in the most recent NAPL State of the Industry (Eleventh Edition) report, total commercial printing revenues have declined more than 20% from the all-time peak of approximately $100 billion in the year 2000. Projections for the next year indicate that sales will increase between 0.5% and 1.5% from the current depressed level, essentially flat when you consider inflation.

As 2013 drew to a close, Imagine! Print Solutions in Minneapolis, Minnesota acquired Classic Graphics in Charlotte, North Carolina. Before December was out, Imagine! announced another deal, acquiring Creative Marketing Solutions, also in Charlotte, and will be rolling the operation into the Classic Graphics facility. The company reported that it expects combined revenues to exceed $300 million.

Commercial Printers Continue their Evolution to MSP’s. Many printing companies will add services and change the company’s name in hopes of rebranding themselves as “Marketing Service Providers.” Possibly more telling than the decline in total revenues in the commercial printing sector, NAPL reported in the State of the Industry (Eleventh Edition) that the percentage of total industry revenue (in the commercial printing sector) that comes from traditional offset printing has declined from 86% in the year 2000 to 61% in 2012. The percentage from offset printing is projected to fall even further to around 54% of total revenues in the coming year. That means that if a commercial printing company hopes to just stay even with its past, it must replace the sales once obtained by providing traditional offset printing with sales from new services.

Although there are many variations on the theme, I see three “forks in the road” as commercial printers head in one of these directions:
- Physical Services, combining mailing & fulfillment services;
- Mobile-Interactive / Digital Delivery of marketing messages;
- Upstream into Creative and Conceptual marketing services.

There were dozens of examples of the “MSP” movement; for example, Sandy Alexander, once known mostly for its high-end high-volume web press printing skills, has greatly diversified its service offerings. Shortly after announcing a management buyout in July, the company moved upstream and acquired a high-end retouching studio in New York City, adding to its other services which include wide format and digital printing capabilities.

Paper Industry Continues to Consolidate & Close Mills. As demand for printing declines, so must the demand for paper; the churn in the business of manufacturing and distributing paper will continue. Among the many deals over the past year, one that stood out was the disappearance of Boise as an independent company when it was acquired in September by Packaging Corp of America. The consolidation of paper distributors will also march on, with acquisitions increasing the vertical integration of the industry. Paper mills will close; International Paper announced the closure of its Courtland, Alabama mill. The mill was reportedly a victim of the ongoing transition from paper statements delivered via US Mail to e-statements delivered electronically via email and mobile devices.

Private Equity Invests in Labels and Packaging Companies. While shunning the commercial printing sector, PE funds will be active in all aspects of the packaging industry, including labels of all sorts, folding cartons, and supplies and equipment geared to packaging.

Irving Place Capital sold Multi Packaging Solutions to Madison Dearborn Partners in July, which then announced in September that the company agreed to a merger with Chesapeake Services Limited, backed by The Carlye Group. The merger of these two PE-backed companies formed a new global packaging powerhouse.

Print Management Firms Evolve. The tremendous growth of the print management business will peak and the players evolve, some into being printers, other move into creative and marketing services.

Some of the biggest names in the business of providing outsourced print purchasing changed dramatically in 2013. Workflow One was acquired in August by Standard Register, one of the country’s largest printers, effectively becoming a printer itself. Pitney Bowes gave up on the print management model, shedding the service to PE giant Apollo Global Management. Innerworkings, the nemesis of many commercial printers as it inserted itself between corporate client and print supplier, appeared to be moving upstream with its acquisition of Eyelevel, a firm that designs and produces in-store displays.

Commercial Printers Acquire Wide Format Shops. Commercial printers will add to their wide format services, moving into the domain once dominated by shops that specialized in offering wide and grand format printing. There were several transactions in 2013 that pointed in this direction, including the acquisition by Pazazz, a printing company in Montreal, Quebec, of Contact Image, also of Montreal.

Local & Regional Newspapers Close Printing Facilities & Outsource Print. There appears to be life remaining in the local and regional newspaper business model, as evidenced by several transactions in 2013 that involved the purchase of newspaper publishers and/or printing facilities. This trend will continue, with consolidation of print production moving to the newest and most efficient plants.

As older presses reached the end of their useful life, several publishers elected to close their own printing facility and outsource the printing to another newspaper publisher with a modern and more efficient facility that is within reasonable distance and is able to meet the demands of daily production and delivery. Recent examples include the Star-Telegram in Fort Worth, Texas closing its printing plant and outsourcing printing to The Dallas Morning News. In New Hampshire, the Union Leader shut down its printing plant, moving the printing to Seacoast Media’s plant in Dover, New Hampshire, one hour away.

Transpromo/Transactional Printers Consolidate. As more and more consumers opt for e-delivery of their statements, the business of printing statements, which had been a growth sector, will continue to face headwinds. SCICOM Data Services filed Chapter 11 bankruptcy in 2013, and was purchased by Venture Solutions, a subsidiary of Taylor Corporation, in a 363 sale proceeding in the Bankruptcy Court. Despite the decline in demand, the underlying need to manage the data and deliver secure documents seems assured, whether by paper or e-delivery, and these printers will consolidate to accommodate the change.

More Trends We Expect in 2014:
- Quick Printers / Copy Shops Merge, Start Up and Close.
- Book Printing Continues to Decline (especially in education).
- Large City Directories Continue to Decline (or disappear).
- Consolidation in Printing MIS Systems Continues.
- Stationery “Goes Mobile” (Website Links, QR Codes, and NFC).
- Major Urban Newspaper Circulation Declines and Some Cease Publication.

2013 December - 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


Bang Printing No Data Brainerd, MN Victor Graphics No Data Baltimore, MD 12/18/13 No Data Asset acquisition Book printing Link
Harland Clarke Holdings No Data San Antonio, TX Valassis No Data Livonia, MI 12/18/13 $1,840 Acquisition Advertising Inserts
(combined $3.3 Bil revenue)
AMSP No Data Alexandria, VA NAPL No Data East Rutherford, NJ 12/18/13 No Data Merger Trade associations Link
Imagine! Print Solutions $191.0 Minneapolis, MN Creative Marketing Solutions No Data Charlotte, NC 12/18/13 No Data Acquisition Direct mail & fulfillment
(combined $300 Mil revenue)
Konica Minolta $8,627 Tokyo, Japan CopySource No Data Coral Springs, FL 12/10/13 No Data Acquisition Managed Print Services Link
Alcom Printing Group No Data Harleysville, PA Macorp Print Group No Data Souderton, PA 12/6/13 No Data Acquisition Commercial Printing Link
Heidelberg € 2,735 Heidelberg,
Neo7even No Data Siegen, Germany 12/5/13 No Data Investment Publishing software Link
Koenig & Bauer Group (KBA) € 1,294 Radebeul,
Flexotecnica € 36.0 Tavazzano, Italy 12/4/13 No Data Acquisition Flexo presses Link
Koenig & Bauer Group (KBA) € 1,294 Radebeul,
Kammann Maschinenbau  € 30.0 Bad Oeynhausen, Germany 12/4/13 No Data Acquisition Glass container screen presses Link
Imagine! Print Solutions $191.0 Minneapolis, MN Classic Graphics $90.0 Charlotte, NC 12/3/13 No Data Acquisition
(New Direction)
Commercial Printing
(combined $280 Mil revenue)

2013 December - Bankruptcy Filings in the Printing, Packaging, Paper & Related Industries

Filing Party

($Mil )

Case #

Filing Party Address


Region & City


Attorney for Debtor

Chapter 11 Filings:
Driscoll Label Co. Inc. 12/9/13 No Data 13-36752 East Hanover, NJ 2nd New Jersey Donald H. Steckroth Vincent Commisa  Flexo label printing
Chapter 7 Filings:
Apogee Containers, Inc. 12/16/13 No Data 13-30034 Riverside, CA 9th Central CA
Santa Ana, CA
Scott C Clarkson Dennis Connelly  Plastic packaging & screen printing

2013 December - 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


Action Copy Plus 12/24/13 No Data Hopkinton, MA None N/A 12/14/13 Retail copy shop Link