Monday, May 5, 2014

A Tale of Two Cities, the Best of Multiples, the Worst of Multiples – April 2014 M&A Activity

It was a Tale of Two Cities for sellers of printing companies in April. For some, it’s the best of times; they appear to have chosen wisely, believed in the power of the internet to transform the business of print, they saw the light and felt the hope of spring as they embarked on their journey. The market anoints these fortunate few with the ultimate reward – the high multiple.

For others less fortunate or tied down by the weight of untimely past investments, it’s the worst of times; they appear foolish to have believed in the business of print, the path forward is dark, they feel the despair and hardship of winter as they trudge forward. The market’s invisible hand smacks down and delivers punishment – the low multiple.

Italian printer Pixartprinting has differentiated itself in the competitive commercial printing market by developing a very user-friendly technology platform, delivering printed products to graphic designers, print brokers, and local printers that act as resellers. Established in 1994, the company reached sales of $77.8 million in 2013 and served 100,000 customers with over 450,000 orders. With only 330 employees, the company’s average order was $173. Despite the small order size, the aggregate revenue equates to $235,900 revenue per employee per year, very respectable in the US commercial printing industry. EBITDA was an impressive $20.85 million, 26.8% on sales. In early April, Vistaprint announced that it acquired Pixartprinting for an offer consisting of mostly cash plus some assumed debt, totaling over $200 million, an astounding 2.6 times annual sales. Not counting the additional potential earnout provision which could yield the sellers another $14 million, the sellers received approximately 9.8 times trailing EBITDA.

Brown Printing was founded in 1957 and enjoys a reputation as one of America’s finest printers capable of printing high-volume, very high-quality publications and catalogs. The company is projecting sales of $350 million for 2014, and prints over 1,000 different magazines and catalogs. Employing 1,850 in several US plants, Brown’s revenue per employee was $189,200 per year. Brown has been making moves to take advantage of new opportunities to serve its customers. As we reported in The Target Report in April 2013, Brown acquired Nellymoser, an innovator in mobile and print-to-digital campaigns serving the advertisers in the magazines printed by Brown. Nonetheless, the company’s reputation and mobile initiatives were not enough to drive a high valuation. Brown agreed to be acquired by Quad/Graphics for $100 million, equal to only 0.29 times projected sales. Brown’s parent company, Gruner + Jahr, does not break out earnings for Brown, however Quad/Graphics reported that the purchase price will be less than 4.0 times adjusted EBITDA after taking anticipated synergies into account. In other words, the unadjusted multiple was likely even lower.

There was hope in the newspaper business in April. Minnesota billionaire, Glen Taylor, made an offer to buy the Minneapolis Star Tribune. The sale has been widely reported as a very positive event for the paper and the community, since Taylor has clearly stated that his goal is to keep a quality independent newspaper in his home state. Although he expects the paper to be self-supporting, Taylor was quoted saying that the purchase “is not the best deal I ever got into.” He should know, since his fortune has been built primarily from specialty printing companies, beginning with his first acquisition when he bought Carlson, printer of stationery and wedding invitations. As reported in the paper he will likely soon own, Taylor added wisdom that rings true for printers of all types, “I’m in a lot of printing areas and they are all difficult business areas. I have just found out that if you’re the best in that area, then you can do quite well.”

Goldman Sachs’ Merchant Banking group and Koch Industries got together in a vote of confidence on the future of print, partnering to acquire Flint Group, the global supplier of inks and printing supplies. Vomela Specialty Company of St. Paul, Minnesota, acquired the Bureau of Engraving, printer of point-of-purchase displays and labels. Boutwell, Owens and Co, a Massachusetts printer of folding cartons, blister cards and other packaging acquired label printer Guynes Printing of Texas, located in El Paso.

Continuing the trend of outsourcing print in the newspaper industry, the Lansing State Journal in Michigan announced that it is closing its printing plant in Delta. The paper, along with several other titles that were printed there, will be printed by Advance Central Services Michigan in one of its three facilities. Following on the recent acquisition of Chesapeake by Multi Packaging Solutions, the company will be closing its packaging plant in Evansville, Illinois. Bankruptcy filings in the industry were less than the spike we reported in March, with three small companies filing for liquidation in Chapter 7, and no new Chapter 11 filings.

2014 April - 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


Irwin-Hodson Company No Data Portland, OR Portland PrintWorks No Data Portland, OR 4/29/14 No Data Acquisition Wide format printing Link
Schiele Group No Data Elk Grove, IL Carlith No Data Carpentersville, IL 4/21/14 No Data Acquisition Commercial printing Link
Konica Minolta $9,343 Tokyo, Japan Pitney Bowes Document Imaging Solutions (Canada) $82.0 Stamford, CT 4/16/14 No Data Acquisition Document management Link
Konica Minolta $9,343 Tokyo, Japan AMS Imaging No Data Warwick, RI 4/15/14 No Data Acquisition Document management Link
Electronics for Imaging (EFI) $745.0 Foster City, CA Group Rhapso No Data Les Ulis, France 4/15/14 No Data Acquisition MIS systems for printing Link
Packaging Dynamics No Data Chicago, IL Pac Paper No Data Vancouver, WA 4/14/14 No Data Acquisition Specialty Paper Products Link
Goldman Sachs Merchant Banking,
and Koch Equity Development
No Data New York, NY Flint Group $2,900 Luxembourg 4/10/14 No Data Acquisition Inks & printing supplies Link
Vomela Specialty Company $200.0 St. Paul, MN Bureau of Engraving No Data Minneapolis, MN 4/7/14 No Data Acquisition POP, commercial & labels Link
Quad/Graphics $4,800 Sussex, WI Brown Printing $350.0 Waseca, MN 4/7/14 $100.0 Acquisition Magazine & catalog printing Link
Worth Higgins & Associates No Data Richmond, VA Petree Press No Data Sterling, VA 4/4/14 No Data Acquisition Printing & copying Link
Multi Packaging Solutions/
No Data New York, NY Jet Lithocolor No Data Downers Grove, IL  4/4/14 No Data Acquisition Credit & gift card printing Link
Multi Packaging Solutions/
No Data New York, NY Integrated Printing Solutions No Data Centennial, CO 4/4/14 No Data Acquisition Credit & gift card printing Link
Glen Taylor No Data North Mankato, MN Star Tribune No Data Minneapolis, MN 4/1/14 $100.0 Acquisition Newspaper publisher Link
Boutwell, Owens and Co No Data Fitchburg, MA Guynes Printing of Texas No Data El Paso, TX 4/1/14 No Data Asset acquisition Commercial & label printing Link
Vistaprint $1,210 Venlo,
Pixartprinting € 56.0 Veneto, Italy 4/1/14 € 127.0 Acquisition
(Leonardo & Co)
Web-to-print, SMB market Link

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

Filing Party

($Mil )

Case #

Filing Party Address


Region & City


Attorney for Debtor

Chapter 11 Filings:
No Chapter 11 Filings Found this Month --- --- --- --- --- --- --- --- ---
Chapter 7 Filings:
Net Publications Inc. 4/23/14 No Data 14-35822 Poughkeepsie, NY 2nd Southern NY
Cecelia G. Morris Daren A. Webber Printing & copying
JM Printing Service, Inc. 4/15/14 No Data 14-17435 Monmouth, NJ 3rd New Jersey
Kathryn C. Ferguson Peter Broege  Commercial printing
Digigraphics, Inc. 4/8/14 No Data 14-12945 Warrenville, IL 7th Northern IL
Donald R. Cassling Elizabeth A. Bates Printing & copying

2014 April - 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


Lansing State Journal - Printing Facility Jul-14 No Data Delta, MI Advance Central Services  Michigan Walker, MI
Bay City, MI
4/29/14 Outsourcing newspaper print operations Link
Legacy Printing 4/7/14 No Data Jackson, MI None N/A 4/24/14 Commercial printing Link
Chesapeake Pharmaceutical and Healthcare Packaging Jun-14 No Data Evansville, IL Multi Packaging Solutions/
New York, NY 4/16/14 Packaging printing Link
Monroe Litho Mar-14 No Data Rochester, NY None N/A 4/4/14 Commercial printing Link