Tuesday, August 7, 2018

If you Can’t Beat ’em, Join ’em - July 2018 M&A Activity

LSC Communications, easily the most active company on our deal log since LSC’s formation in 2016, announced an equity investment in MAZ Systems. The acquired company is a “content logistics” company that has created a cloud-based software system that delivers articles, video, images, and audio to a multitude of content-delivery platforms including Apple iOS, Android, Apple TV, Roku, Amazon Fire, Apple News, Twitter, Amazon Alexa, LinkedIn, Slack, Xbox, YouTube, Vimeo, and others. The software navigates the programming nuances required by each digital platform. The content creator (publisher, brand, media provider or organization) is freed up to do what it does best, create original content. As new platforms emerge, the MAZ folks program the new pathways and connections; customers are relieved of the cost and complexity of keeping up with all these digital channels. 

As a printer of many publications, a position that LSC reinforced in September 2017 with its acquisition of Publishers Press, LSC is certainly affected by the digital headwinds facing publishers. Those digital forces are driving down both paid circulation numbers and ad page counts. Those seemingly relentless dynamics directly equate to press runs of fewer pages and lower quantities. In an attempt to explain how it makes sense to help its clients deliver content electronically via the expanding multitude of digital channels, LSC’s new President of Business Development stated, “LSC will harness MAZ’s technology to complement and expand its legacy platform to expose clients to new distribution solutions that help streamline and accelerate their business strategies beyond print.”

I must admit that I’m tempted to be enthusiastic when I see a printing company invest in ancillary services that create “value-added” around the core deliverable printed product. Examples of these acquisitions abound in our industry. Commercial printers acquire mailing services firms; high-volume printers build out sophisticated commingling operations and acquire logistics companies to drive down postal and delivery costs for their clients; commercial printers swim upstream into creative offerings; transactional printers establish highly secure facilities and compliance procedures to maintain data integrity; direct mail printers seek to establish closed-loop data analytics to prove and improve the effectiveness of their clients’ direct mail campaigns; offset printers acquire a wide-format shop – you get the point. Printing companies are using acquisitions to redefine their place in the market by expanding into adjacent services.

Some commercial printing companies have successfully navigated the transformation to become true Marketing Service Providers. Otherwise known as “MSPs,” these companies provide a full range of competencies, including ideation, creative and graphic design, website development and maintenance, campaign management, social media marketing, and yes, there is even print in the mix! In many cases, the printed messages are still a core component of the marketing campaign and often remain the primary revenue driver for the company.

Back in 2013, Brown Printing acquired Nellymoser, an innovator in mobile and print-to-digital campaigns that served the same advertisers that placed ads in the magazines printed by Brown (see The Target Report - Is the Printing Industry Devolving or Evolving? – March 2013). At the time, there was lots of excitement around the ideas of QR codes, augmented reality (“AR”) and NFC (near-field communication). All these technologies were designed to connect a printed page to a webpage on a digital device, usually a smart phone. By helping publishers use print to drive webpage traffic, or so the theory went, Brown (and other printers) were adding value to the print proposition that was their core competency and deliverable. Despite the apparent game-changing acquisition of a leading-edge mobile technology company, a year and month later, Brown Printing was acquired by Quad/Graphics at what appeared to be a bargain-basement price (see The Target Report - A Tale of Two Cities, the Best of Multiples, the Worst of Multiples – April 2014).

As LSC invests in the new digital content technology, it has continued to rationalize and divest non-core print operations. In July, the company announced the sale of its European print operations to the UK-based Walstead Group, a private equity-backed printing roll-up with trailing revenues of approximately $796 million. The business transferred from LSC to Walstead represents printing revenues of about $250 million and a reduction in LSC’s projected EBITDA of approximately $12 million.

A year ago, LSC made an equity investment in Authors, a software company that uses artificial intelligence to analyze editorial content (see The Target Report - Transformation and Rebirth – July 2017). That investment, and the recently announced deal with MAZ Systems, are clearly aimed at acquiring the next wave of content-related digital technology to serve the company’s publishing customers. The question remains; does the acquisition of software that automates editorial functions and enables efficient content distribution via digital channels support and drive core print operations? Or does the onslaught of digital publishing technology continue to eat away at high-volume publication printers, despite their best efforts to acquire and implement these technologies?

Packaging - Labels

Fortis Solutions Group, a serial acquirer in the label segment, announced its latest deal, the purchase of Lewis Label Products in Forth Worth, Texas. The acquired company manufactures pressure sensitive labels, shrink sleeves and flexible packaging. Backed by Main Post Partners since 2017, the company now has over 400 employees with locations in seven states.

Resource Label Group, a portfolio company of First Atlantic Capital and TPG Growth, acquired Ingenious Packaging in Toronto. Ingenious produces pressure sensitive labels and shrink sleeves for a wide variety of consumer products. Formerly part of Tapp Label, the Toronto operation was spun off and renamed “Ingenious” when G3 Enterprises, the investment arm of the third generation of Gallo winemaking family, acquired Tapp’s Oregon and California plants which mostly produced labels for the wine industry. This latest acquisition brings Resource Label Group’s locations to fifteen and is the company’s first in Canada.

Inovar Packaging Group, headquartered in Dallas, picked up Topp Labels in Miami and announced plans to tuck the acquired company into its existing location in Fort Lauderdale, Florida. Inovar was acquired by AEA Investors in January 2016 and later that year announced a triple-play acquisition of three label printing companies (see Private Equity LOVES Labels – August 2016). Inovar followed that deal shortly thereafter with the acquisition of LabelPrint America in Newburyport, Massachusetts.

Sun Solutions (formerly Sun Printing), a diversified commercial printing operation in West Columbia, South Carolina, acquired its first company in the packaging segment with the purchase of Graphic Label Solutions in Columbia, Tennessee. The company also owns Consolidated Mailing Services, a full service lettershop with commingling capacity
.


2018 July - 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
Release
LSC Communications $3,710 Chicago, IL MAZ Systems No Data New York, NY 7/31/18 No Data Equity Investment Content logistics Link
Sun Solutions No Data West Columbia, SC Graphic Label Solutions No Data Columbia, TN 7/31/18 No Data Acquisition Label printing Link
Resource Label Group
(Port co. First Atlantic Capital)
No Data Memphis, TN Ingenious Packaging
(ne’ Tapp Label)
No Data Toronto, ON 7/31/18 No Data Acquisition Label & sleeve printing Link
Minuteman Press Longwood No Data Longwood, FL Metrovista No Data Longwood, FL 7/31/18 No Data Acquisition Marketing services Link
Mac Papers No Data Jacksonville, FL Wilkerson Packaging  No Data Atlanta, GA 7/30/18 No Data Acquisition Paper distribution Link
RFB Enterprises
(Reade Brower)
No Data Camden, ME Maine Titles (2) No Data Ellsworth, ME 7/25/18 No Data Acquisition Community newspapers Link
Inovar Packaging Group
(Port co. AEA Investors)
No Data Dallas, TX Topp Labels No Data Miami, FL 7/24/18 No Data Acquisition Labels & flexible packaging Link
Ahlstrom-Munksjö $2,609 Stockholm, Sweden Expera Specialty Solutions No Data Kaukauna, WI 7/23/18 $614.6 Acquisition Specialty papers Link
WhatTheyThink No Data Lexington, KY Printing News Group No Data Fort Pierce, FL 7/23/18 No Data Merger Industry publications Link
Walstead Group
(Port co. Rutland Partners)
$796.5 London, UK European print operations
(Div. LSC Communications)
$250.0
($3,710)
Chicago, IL 7/19/18 $60.0 Acquisition Web printing operations Link
Mudlick Mail
(Port co. Clearview Capital)
No Data Acworth, GA Muscle Up Marketing No Data Alpharetta, GA 7/19/18 No Data Acquisition Niche marketing services Link
Esko
(Sub. Danaher)
No Data Ghent, Belgium BLUE Software
(Port co. Diversis Capital)
No Data Chicago, IL 7/18/18 No Data Acquisition Brand management software Link
Ennis $369.0 Midlothian, TX  Wright Business Graphics $58.0 Portland, OR 7/17/18 No Data Acquisition Business forms & direct mail Link
Fortis Solutions Group
(Port co. Main Post Partners)
No Data Virginia Beach, VA Lewis Label Products No Data Fort Worth, TX 7/12/18 No Data Acquisition Labels & flexible packaging Link
Kelley Holmes No Data Fort Pierce, FL Printing News (and other titles)
(Prop. Endeavor Business Media)
No Data Nashville, TN 7/11/18 No Data Acquisition Industry publications Link
Modern Litho No Data Jefferson City, MO James Printing No Data N Kansas City, MO 7/9/18 No Data Acquisition Commercial printing Link
Berwind No Data Philadelphia, PA Maxcess
(Port co. Bertram Capital)
No Data Oklahoma City, OK 7/3/18 No Data Acquisition Web rollers & accessories Link
Case Paper No Data Harrison, NY WinterBell Converting No Data High Point, NC 7/2/18 No Data Acquisition Paperboard converting Link


2018 July - 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:
Diverse Label Printing, LLC 7/23/18 No Data 18-10792 Burlington, NC 4th Middle NC
Greensboro
Catharine R. Aron John A. Northen  Label printing
Chapter 7 Filings:
Kernwood Forbes Press, Inc. 7/23/18 No Data 18-12805 Malden, MA 1st Massachusetts
Boston
Joan N. Feeney Jordan L. Shapiro  Commercial printing
Altman Printing Company, Inc. 7/12/18 No Data 18-03531 Spartanburg, SC 4th South Carolina
Columbia
Helen E. Burris Randy A. Skinner Commercial printing


2018 July - 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
Guynes Printing 8/29/19 No Data El Paso, TX Boutwell, Owens and Co Fitchburg, MA Jul-18 Commercial and packaging printing Link
Printing facility 8/22/18 No Data New Haven, CT Knights of Columbus New Haven, CT Jul-18 Publication printing Link
Business Printing 8/14/18 No Data Carrollton, TX None N/A Jul-18 Commercial printing Link