Thursday, April 6, 2017

View into the Future of Printing Process Control – March 2017 M&A Activity

Science and technology-based conglomerate Danaher, with multiple portfolio companies in growth segments such as dental products, life sciences, medical diagnostics, and environmental testing, added to its roster of printing process control companies with the acquisition of Israel-based Advanced Vision Technology (AVT). The acquired company designs and manufactures sophisticated quality inspection, color measurement, and printing process control devices that replace traditional craft-based methods. AVT will join Danaher’s Product Identification Platform, which includes color inspection technology company X-Rite, packaging workflow company Esko, color-standard authority Pantone, coding and marking systems Videojet, and digital asset management solution MediaBeacon. Known for its disciplined approach to acquisitions, Danaher is clearly betting that print is not dead, rather print’s future is technology-driven and controlled to maximize quality and minimize waste. In the words of Danaher’s CEO, the company’s acquisitions are strategically focused “with a clear eye towards ensuring long-term sustainable positions in attractive markets around the world.” Printers take heart…

Commercial Printing – Diversified Services

Ripon Printers, located in the town of the same name in Wisconsin and proficient in the production and distribution of catalogs, direct mail, and publications, acquired Iowa-based Maquoketa Web Printing.* The acquired company specializes in long-run multi-page multi-color coldset web printing of catalogs and similar products, also one of Ripon’s specialties. All production will be “tucked-in” to the Ripon facility which also offers heatset web, sheetfed offset, and digital printing capabilities, as well as digital communication services.

The Vomela Companies, a national printing rollup with niche specialties in vehicle wraps, super-grand format printing, event signage, in-store retail display, and RV vehicle decoration, among other unique offerings, is somewhat surprisingly heading once again into the more generalized commercial printing segment. Vomela, headquartered in St. Paul, Minnesota and with more than 20 locations from British Columbia to New York City, announced the acquisition of Elk Grove Graphics, a commercial printer in Elk Grove, Illinois. Vomela owns one other commercial printing company, Virginia-based Master Print, acquired in 2014. Unlike Master Print, Elk Grove Graphics will operate as a unit of Vomela’s C2 Imaging division which primarily offers an array of wide format products.

Financial Printing

Vista Equity Partners, a global investment firm with headquarters in Austin, Texas, acquired check printer D+H, based on Toronto, in a deal valued at approximately $4.8 billion. Vista plans to combine D+H with its existing portfolio company, UK-based Misys, creating a diversified provider of software and support services. The merged entity will serve banking and financial service companies in over 130 countries, including 48 of the top 50 banking institutions. D+H was founded in 1875 as Davis & Henderson, a Canadian printing and bookbinding company which eventually focused on printing for financial institutions. In the 1960’s, the company began printing checks with magnetic inks which became its core business. In 2005, D+H strategically began to acquire technology companies to serve its financial clients. With approximately one third of its revenue still deriving from the check printing business, it’s a storyline and timeline very similar to Deluxe Corporation’s evolution, as featured in in our report last month (see The Target Report – February 2017).

Toppan Vite, the New York financial printing division of the giant Japanese printing company Toppan, announced the acquisition of Vintage, a division of PR Newswire. Formerly called Vintage Filings, the acquired company provides financial compliance services and will compliment Toppan Vite’s existing print-centric business.

Packaging

EQT Partners, a global private equity investment firm headquartered in Sweden, acquired a co-controlling stake in GPA Global, a packaging design and outsourcing company based in Shenzen, China. With offices on both coasts of the US, and in Ireland and Greece, the company manufactures high-end packaging at its facility in Shenzen and with production partners in China.

In a similar strategy, managing the supply chain and outsourcing high-end packaging production to China, Eureka Growth Capital is backing Jansy Packaging which the fund acquired in November 2014 (see The Target Report – November 2014). Eureka recently bolted California-based Cogent Partners onto the Jansy platform.

Continuing its pattern of non-stop acquisitions in the packaging segment, and not waiting for the completion of its purchase by WestRock, Multi Packaging Solutions acquired label printer Paris Art Label Company, located on Long Island, New York.


* Graphic Arts Advisors, publisher of The Target Report, served as exclusive advisors to Maquoketa Web Printing in this transaction.


2017 March - 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
Releases
Cansel No Data Vancouver, BC Wide Format Supplies
(Div. Midland Paper)
No Data Wheeling, IL 3/31/17 No Data Acquisition Wide format supplies Link
Canon Europe
(Sub. Canon)
No Data Middlesex, UK Kite.ly No Data London, UK 3/28/17 No Data Acquisition Mobile print app platform Link
Goss International
(Port co. American Ind. Partners)
No Data Durham, NH Graphic Automation Controls No Data Carbondale, PA 3/27/17 No Data Acquisition Press upgrades, maintenance Link
EQT Partners No Data Stockholm, Sweden GPA Global No Data Shenzhen, China 3/23/17 No Data Acquisition Packaging design & outsource Link
Multi Packaging Solutions $1,570 New York, NY Paris Art Label Company No Data Patchogue, NY 3/22/17 No Data Acquisition Label printing Link
Ripon Printers $48.8 Ripon, WI Maquoketa Web Printing No Data Maquoketa, IA 3/21/17 No Data
Acquisition
(Graphic Arts Advisors)
Coldset web printing Link
Vista Equity Partners No Data Austin, TX D+H $1,680 Toronto, ON 3/13/17 $4,800 Acquisition Checks & financial systems Link
Toppan Vite
(Div. Toppan)
$12,930 Tokyo, Japan Vintage
(Div. PR Newswire)
No Data New York, NY 3/10/17 No Data Acquisition Financial compliance services Link
Sun Chemical
(Div. Dainippon Ink & Chemicals)
$7,500 Parsippany, NJ RJA Dispersions No Data Hudson, WI 3/6/17 No Data Acquisition Digital ink pigments Link
Danaher $16,880 Washington, DC Advanced Vision Technology No Data Hod HaSharon, Israel 3/6/17 $100.0 Acquisition Print inspection systems Link
Signet Enterprises No Data Akron, OH BindTech No Data Nashville, TN 3/6/17 No Data Acquisition Trade bindery services Link
Global Imaging Systems
(Div. Xerox)
No Data
($10,770)
Tampa, FL Laser Resources No Data Grimes, IA 3/1/17 No Data Acquisition Managed print services Link
Vomela $227.6 St. Paul, MN Elk Grove Graphics $11.2 Elk Grove Village, IL 3/1/17 No Data Acquisition Commercial printing Link
Siegwerk No Data Siegburg, Germany Hi-Tech Products No Data Derbyshire, UK 3/1/17 No Data Acquisition Flexo inks & coatings Link


2017 March - 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:
Metro Newspaper Advertising Services, Inc. 3/27/17 No Data 17-22445 Yonkers, NY 2nd Southern NY
Manhattan
Robert D. Drain Jonathan S. Pasternak  Newspaper ad buying services
Chapter 7 Filings:
Gator Communications Group, LLC
(aka Gator Media Group, LLC)
3/23/17 No Data 17-15733 Clifton, NJ 3rd New Jersey
Newark
Vincent F. Papalia Pro Se Commercial printing


2017 March - 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
Aulward Graphics 4/27/17 No Data Grimsby, ON None N/A Mar-17 Wide format printing Link
Peake DeLancey Printers 4/26/17 No Data Cheverly, MD None N/A Mar-17 Commercial printing Link
Dillon Bindery 4/25/17 No Data Milwaukee, WI None N/A Mar-17 Trade bindery Link
PaperWorks Philadelphia Mill 4/14/17 No Data Philadelphia, PA PaperWorks
(Port co. Sun Capital Partners)
Bala Cynwyd, PA 3/24/17 Paperboard mill Link
American Printing Solutions 4/12/17 No Data Frankfort, KY None N/A Mar-17 Commercial printing Link

Tuesday, March 7, 2017

Transformation of a Legacy Print Business – February 2017 M&A Activity





You might think that Deluxe, the leading printer of paper checks, is facing insurmountable headwinds as consumers (especially the millennial generation) abandon paper checks for electronic payment methods. However, Deluxe long ago realized that it was not a printing company, rather it serviced the financial services industry, and with that mindset it recently announced another transformational acquisition with the purchase of RDM Corporation. The acquired company does not print, rather it converts traditional printed documents, the simple check, into a digital document via its mobile deposit capture software or through its check scanning systems. Talk about serving your formerly print-centric clients (banks and consumers) with technology that creates a bridge to the future. The Deluxe history of recent acquisitions illustrates a deliberate journey from its paper-based origins to a highly diversified company that includes, but is not totally dependent on, printed products.

The process of transitioning from print to digital documents and services is not a new development for Deluxe. In its latest annual report, Deluxe reported that 30 percent of its $1.8 billion annual revenue was in non-print “marketing and other services.” The portion of non-print revenues was even higher, 37 percent, within its financial services segment. Just last month, Deluxe announced another acquisition, purchasing First Manhattan Consulting Group (FMCG Direct). FMCG is a direct mail and marketing company that serves financial institutions with marketing analytics, proprietary research, and target market segmentation models that drive higher response rates. Creative campaign design and production management round out the service offerings. There is nary a mention of print on the acquired company’s website, even though FMCG’s final deliverable product is direct mail. Notable for our readers interested in transaction values is the purchase price of $200 million which was reported to be 2.35 to 2.5 times projected 2017 revenues of $80 to $85 million. In another acquisition of a data analytics company that improves marketing programs, and illustrative of its clear strategic acquisition plan, Deluxe acquired Datamyx in 2015.

Meanwhile, the traditional check printing business continues to decline both in revenues and profits, with sales down 7.8% year-over-year for the fourth quarter of 2016. Despite the steady decline in its traditional business, overall company revenues have increased due to the company’s acquisitions that are strategically focused on marketing solutions and other related services.

Deluxe began printing paper checks in 1915. In 2017, the company still prints checks, but also provides sophisticated marketing services, financial processing services, as well as hosting more than 950,000 websites for small businesses. That’s transformation!

Consumer Web-to-Print

Despite a crowded market in the online photo book printing segment, Utah-based Chatbooks raised $11.5 million in a Series B funding led by Aries Capital Partners, bringing total angel and VC investment in the startup to over $20 million. Founded by a photo-book-worthy mom-and-pop couple with seven children, the company approached the photo book market with two propositions, keep it simple and make it accessible via mobile.

The online photo book printing industry in the US is now estimated to be in excess of $2 billion annually and has been growing at an 11.7% rate with over 850 companies competing one way or another in the segment. In a few short years, the business has become highly competitive; a simple online search reveals a plethora of companies offering deep discounts from list pricing. The largest player in the segment, publicly traded Shutterfly, finished 2016 with over $1 billion in revenue. So how did the Johnny-come-lately startup Chatbooks convince investors to fund another round in a printing service? It may have something to do with the company’s brilliant use of online videos featuring a harried mother explaining how simple it is to order their printed photo books. The online videos are a viral phenomenon, driving viewers via social media to their website and ultimately enough folks load the mobile app and begin ordering printed photo books.




Commercial Printing – Diversified Services

Orora, the Australian company that has entered the retail display segment in a big way over the past year continued its acquisition spree in February, announcing the simultaneous purchase of the Garvey Group based in Niles, Illinois and Graphic Tech in Fullerton, California. While not announcing the price paid separately for each company, Orora did reveal that the combined price was $54 million which represents a multiple of 5.8 times trailing EBITDA. In what appears to be an Orora transaction signature bonus payment, the sellers were reimbursed an additional $5 million for recent capital investments, bringing the effective multiple paid to 6.3 times EBITDA.

Orora has ignited interest and established a valuation benchmark in the retail display and point-of-purchase segment, having only last month acquired Register Print Group in New Jersey at 6.2 times EBITDA including reimbursed capex (see The Target Report – January 2017). These recent acquisitions are in addition to the beachhead Orora established in March 2016, entering the US display printing segment with the acquisition of Dallas-based IntegraColor at a multiple of 6.9 times trailing EBITDA.

The stepped-up acquisition activity in the retail display market over the past year began in earnest in January 2016 when Oak Hill Partners acquired Imagine! Print Solutions which reported revenues in excess of $303 million. (for more about the market for companies in the POP printing segment, see The Target Report – January 2016).

In the more generalized commercial printing segment, Henry Wurst, a $70 million printing company in Kansas City, reached across to the other side of Missouri and acquired St. Louis-based Universal Printing Company which most recently reported $40 million in sales. Production will be consolidated in the Kansas City location, with some sales and client services remaining in St. Louis. Universal had previously announced its sale to Consolidated Graphics (CGX) back in June 2013 but was left at the alter in an unconsummated deal when CGX was itself acquired by RR Donnelley in October of the same year.

Packaging

Jansy Packaging, a design and outsource production agency headquartered in Fort Lee, New Jersey, with backing from Eureka Growth Capital, acquired Cogent Partners, which offers similar services out of its Pomona, California location. Both companies provide global sourcing of package manufacturing. Cogent’s headquarters located in the Dongguan manufacturing region of China strengthen the merged company’s outsourcing value proposition.

MPI Label Systems announced the acquisition of Label Gallery, a flexo and digital label printer located in Norwich, New York. The Ohio-based consolidator now has 11 plants located in 9 states, with over 500 employees. New Jersey-based Quality Packaging Specialists International (QPSI) acquired International Labs located in St. Petersburg, Florida. Both buyer and seller specialize in packaging for the pharmaceutical industry.

Morgan Stanley Capital acquired Fisher Container, a manufacturer of shrink packaging and bags. In a relatively upbeat market for corrugated packaging (see The Box is in Demand, The Target Report – October 2015), Kapstone Paper & Packaging acquired Associated Packaging, a producer of corrugated boxes, point-of-purchase displays and specialty packaging.



2017 February - 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
Releases
Go Modern
(Div. Advisors Excel)
No Data Topeka, KS More Than Banners No Data Topeka, KS 2/25/17 No Data Acquisition Wide format printing Link
Jansy Packaging
(Port co. Eureka Growth Capital)
No Data Fort Lee, NJ Cogent Partners No Data Pomona, CA 2/22/17 No Data Acquisition Packaging design & outsource Link
Orora $2,986 Hawthorn,
Australia
Graphic Tech No Data Fullerton, CA 2/15/17 No Data Acquisition Retail display Link
Orora $2,986 Hawthorn,
Australia
Garvey Group No Data Niles, IL 2/15/17 No Data Acquisition Retail display & packaging Link
Express Image No Data St. Paul, MN SourceOne Graphics No Data Spring Lake Park, MN 2/14/17 No Data Acquisition Wide format printing Link
Superior Packaging & Finishing No Data Braintree, MA Graphic Arts Finishers No Data Charlestown, MA 2/13/17 No Data Acquisition Trade bindery services Link
Deluxe $1,850 Shoreview, MN RDM $21.2 Waterloo, Ontario 2/13/17 $52.5 Acquisition Financial processing systems Link
Henry Wurst $70.6 Kansas City, MO Universal Printing $40.0 St. Louis, MO 2/10/17 No Data Acquisition
(New Direction)
Commercial printing Link
MPI Label Systems No Data Sebring, OH Label Gallery No Data Norwich, NY 2/8/17 No Data Acquisition Label printing Link
QPSI No Data Burlington, NJ International Labs No Data St. Petersburg, FL 2/7/17 No Data Acquisition Pharmaceutical packaging Link
Bigname Commerce
( Port co. TZP Group)
No Data Amityville, NY Folders.com No Data Mount Jackson, VA 2/7/17 No Data Acquisition Presentation products Link
ICON Digital Productions $37.0 Markham, ON Toronto Trade Printers No Data Markham, ON 2/6/17 No Data Acquisition Commercial printing Link
Morgan Stanley Capital No Data New York, NY Fisher Container No Data Buffalo Grove, IL 2/3/17 No Data Acquisition Shrink packaging & bags Link
AlphaGraphics North Austin
(Franchisee)
No Data Austin, TX AlphaGraphics Midtown No Data Austin, TX 2/2/17 No Data Acquisition Printing & copying Link
Electronics for Imaging (EFI) $922.1 Foster City, CA FreeFlow Print Server business
(Div. Xerox)
No Data Norwalk, CT 2/2/17 $22.0 Acquisition Digital front end servers Link
Kapstone Paper & Packaging $3,080 Northbrook, IL  Associated Packaging No Data Greer, SC 2/1/17 No Data Acquisition Corrugated packaging Link


2017 February - 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:
M.O.R. Printing, Inc. 2/8/17 No Data 17-11570 Fort Lauderdale, FL  11th Southern FL
Fort Lauderdale
John K. Olson Chad T. Van Horn Commercial printing
Chapter 7 Filings:
Hauser Printing Company Incorporated
aka Garrity Print Solutions
2/23/17 No Data 17-10409 New Orleans, LA 5th Eastern LA
New Orleans
Elizabeth W. Magner Tristan E. Manthey  Commercial printing
McBattas Packaging & Printing, Inc 2/17/17 No Data 17-40203 Fairbury, NE 8th Nebraska
Fargo, ND
Shon Hastings David P. Lepant  Commercial printing & folding cartons


2017 February - 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
Gannett - Printing facility Jun-17 No Data Freehold, NJ Gannett McLean, VA 2/16/17 Consolidating print in Rockaway, NJ Link
Graphic Communications 3/23/17 No Data Upper Marlboro, MD None N/A Feb-17 Commercial printing Link
World Wide Lines Mar-17 No Data Covington, TN None N/A Feb-17 Screen and dye-sub printing Link
Sunshine Graphics 3/15/17 No Data Miami, FL None N/A Feb-17 Commercial printing Link