Monday, November 8, 2021

The End of the Dotcom Era – October 2021 M&A Activity


The printing industry had its own dotcom boom and bust. It was at the end of the last millennium and the big Print show held at McCormick Place in Chicago was all abuzz about the dotcom companies that were invading the industry. These upstarts were making big promises that they represented the new way that printers and their customers would come together via automated internet-based platforms. The star of the show was printCafe, a newly agglomerated collection of acquired existing printing management information systems. With a hipster booth, all decked out in coffee brown and a clever steaming cup of coffee logo, the prime show location was mobbed. Some attendees, myself included, were trying to understand what it meant now that my printing company’s MIS system had been acquired by and was part of a dotcom darling. Did I really want this upstart coming between my company and our customers? Exactly who did they intend to serve, printers like me or our customers? I knew right away that the reverse auction feature did not sound good. 

Along the back wall was another dotcom startup promising to change the world of printing. They called themselves Noosh, a whimsical name with a correspondingly whimsical logo. At the time, it was not exactly clear what they intended their software to do for printers, or maybe do to printers. But it certainly was exciting. The dotcom craze was in full swing and every day a new company appeared ready disrupt another industry, from books to pet food (as we now know, the book thing worked out, the pet food thing did not). Printing was just next in line. It’s been two decades since the internet bubble burst in 2000, dotcom stocks crashed, high-flying companies evaporated overnight, and internet companies lost an aggregate 75% of their value in six months. 

PrintCafe missed the boat, planning to go public in March 2000, the same month that the warning flags went up that many of the dotcom companies were burning cash with no prospect of making a profit. Not to be dissuaded, and still burning cash, printCafe went public the next year, eventually earning the position as the second-worst initial public offering of 2002, losing 90% of its initial offering price. As it turned out, not much changed with the MIS systems. Progress came to a virtual halt with the MIS systems until eventually EFI acquired printCafe. EFI dropped the caffeine-inspired theme and began the difficult job of making sense out of the disparate members of the coffee clutch. 

Noosh somehow made it through and survived, morphing into a marketing execution and procurement system. The logo grew up, as did the business, recently reported to have in excess of $1.2 billion of spending coursing through the Noosh system on the way to printing and promotional suppliers. The audience for Noosh is now clear, large corporate enterprise marketing departments and advertising agencies are each offered a version to support their procurement of marketing materials and control costs. Printing companies need not apply. 

The Noosh website still promotes the dreaded reverse auction, a very unpopular (among printers), but common, feature of early internet-based print purchasing platforms, in which participating printers get the privilege of finding out which company will lower their price the most. 

HH Global, the UK-based print and marketing management company, announced the purchase of Noosh, touting that the combination of the companies “will allow both businesses to leverage greater aggregated spend under management.” The purchasing power of HH Global is not welcome at many printing companies when they find out that their formerly loyal customers have outsource the print buying decision to a global behemoth whose very existence is based on relentlessly squeezing down suppliers’ margins. The acquisition of Noosh comes a little more than a year after HH Global took out Innerworkings, its major competitor in the print management business (see Buyers are On The Move and On Track, Marketing Execution (Print Management) – July 2020). 

Much has changed since the dotcom boom and bust. Printing companies still have direct relationships with many of their customers. The promise of printCafe and Noosh did not play out as their founders thought and promised back in Chicago. However, as it turns out, a significant portion of the spend on printing and related marketing materials was disrupted and is now controlled by a global intermediary using internet-based technology. 

Commercial Printing

Allan Creel, formerly the owner of Creel Printing, is back in the game with the purchase of Fenske Media in Rapid City, South Dakota. Creel was an early devotee of on-demand digital printing technologies within the commercial printing segment, acquiring New Jersey-based GlobalSoft Digital Solutions back in 2015, a quantum-jump in distance and technology from the large offset printing facility the company had in Las Vegas. Creel Printing grew to six locations, $120 million in revenue, and approximately 700 employees, before selling out to LSC Communications in 2017. In another stop on a long and winding road, in 2020 Creel bought back his namesake company in a 363-asset sale from LSC Communications when LSC entered bankruptcy. That did not last long and select assets of the company were sold to national consolidator Mittera Group less than five months later and the Las Vegas operation was shut down. People in the printing industry often say the ink gets in your blood and no matter how hard you try the industry draws you back in. It seems that Allan Creel would agree. 

Packaging

Private equity firms continued their love affair with the packaging industry. Roll-ups are combined with other roll-ups and PE funds complete secondary and even tertiary buyouts from other funds (see Private Equity Fuel$ Consolidation of Label Industry – September 2021 and also Packaging Industry Consolidation in Every Direction – July 2021). 

Fortis Solutions Group, with backing for several years from Main Post Partners, was acquired in a secondary buyout funded by Harvest Partners. Four days before the announced switch of financial sponsors, Fortis itself acquired Quality Tape and Label, a manufacturer of labels and shrink sleeves in Marietta, Georgia. 

In another secondary buyout, Chicago-based private equity fund GTCR acquired PPC Flexible Packaging. PPC Flexible Packaging had built up a network of ten manufacturing facilities in the US and South America in just four years, backed with funding from Morgan Stanley Capital. 

C-P Flexible Packaging, a portfolio company of First Atlantic Capital, acquired Preferred Packaging, a producer of flexible packaging film in Norcross, Georgia. Rohrer, with financial backing by Wellspring Capital, announced the purchase of Coburn Carton Solutions, a manufacturer of folding cartons based in Hayesville, OH.

 
2021 October - Mergers and Acquisitions in the Printing, Packaging, Paper & Related Industries

Deal Party #1
(Surviving Entity)
Pre-Deal
Revenues
(US$Mil)


Party #1 Address


Deal Party #2
Pre-Deal
Revenues
(US$Mil )


Party #2 Address
Date
Deal
Public
Deal
Value
(US$Mil)

Deal Structure
(Intermediary)


Notes

Press
Release
Hybrid Software Group No Data Cambridge, UK ColorLogic No Data Rheine, Germany 10/28/21 No Data Acquisition Color profile software Link
Allan Creel No Data Las Vegas, NV Fenske Media No Data Rapid City, SD 10/26/21 No Data Acquisition
(New Direction)
Commercial printing Link
C-P Flexible Packaging
(Port co. First Atlantic Capital)
No Data York, PA Preferred Packaging No Data Norcross, GA 10/22/21 No Data Acquisition Flexible packaging films Link
Lowest Price Print No Data West Sacramento, CA Volume Press No Data West Sacramento, CA 10/21/21 No Data Acquisition Commercial printing Link
Dataflow No Data Binghamton, NY Quicker Printer No Data Elmira, NY 10/18/21 No Data Acquisition Printing & copying Link
Harvest Partners No Data New York, NY Fortis Solutions Group
(Port co. Main Post Partners)
No Data Virginia Beach, VA 10/15/21 No Data Acquisition Labels & flexible packaging Link
Fortis Solutions Group
(Port co. Main Post Partners)
No Data Virginia Beach, VA Quality Tape and Label No Data Marietta, GA 10/11/21 No Data Acquisition Labels & shrink sleeves Link
Dotdash
(Port co. IAC)
$214.0 New York, NY Meredith $2,990 Des Moines, IA 10/6/21 $2,700 Acquisition Magazine publishing Link
Rohrer
(Port co. Wellspring Capital)
No Data Wadsworth, OH Coburn Carton Solutions No Data Hayesville, OH 10/4/21 No Data Acquisition Folding cartons Link
BR Printers $21.6 San Jose, CA C.J. Krehbiel Co
dba CJK Print Possibilities
$14.5 Cincinnati, OH 10/1/21 No Data Acquisition
(Anderson LeNeave)
Book manufacturing Link
Champion Media No Data Mooresville, NC Herald-Advocate No Data Bennettsville, SC 10/1/21 No Data Acquisition Community newspaper Link
HH Global Group $426.5 Leatherhead, England Noosh $11.0 Mountain View, CA 10/1/21 No Data Acquisition Procurement management Link
CCL Industries $5,480 Toronto, ON D&F $31.3 San Luis, Mexico 10/1/21 $50.7 Acquisition Industrial printing Link
GTCR No Data Chicago, IL PPC Flexible Packaging
(Port co Morgan Stanley Capital)
No Data Buffalo Grove, IL 10/1/21 No Data Acquisition Flexible packaging Link


2021 October - Bankruptcy Filings in the Printing, Packaging, Paper & Related Industries



Filing Party

Date
Case
Filed
Pre-Petition
Revenues
(US$Mil)



Case #



Filing Party Address



Circuit



Region & City



Judge



Attorney for Debtor



Notes
Chapter 11 Filings:
Mid Atlantic Printers, LTD. 10/27/21 No Data 21-61173 Altavista, VA 4th Western VA
Lynchburg
Rebecca B. Connelly Andrew S. Goldstein Commercial printing
Chapter 7 Filings:
Pocono Screen Supply, LLC 10/31/21 No Data 21-02229 Lackawanna, PA 3rd Middle PA
Wilkes-Barre
Henry W. Van Eck Brian E. Mannin Screen printing supplies

  
2021 October - Non-Bankruptcy Closures in the Printing, Packaging, Paper & Related Industries



Closed Company / Facility

Date of Closure
Pre-Closure
Revenues
(US$Mil)



Closing Address
Related Party Related Party
Address
Date Closure Public


Notes

Press
Releases
Windmill Press 11/9/21 No Data Pennsauken, NJ None N/A Oct-21 Specialty printing & finishing Link
Brown Industries 12/16/21 No Data Dalton, GA None N/A Oct-21 Retail displays Link

Thursday, October 7, 2021

Private Equity Fuel$ Consolidation of Label Industry – September 2021 M&A Activity


It’s a feeding frenzy in the prime label printing and converting business. Fueled by multiple private equity-backed roll-up platforms, the activity has been non-stop and does not appear to be ready to slow down until all the prime fruit has been picked.

Resource Label Group, which itself changed hands in July, was back at the closing table in September, announcing two more acquisitions in addition to the acquisition of Tek Label and Printing in August. In its most recent deal, Resource Label acquired Ample Labels based in Nixa, Missouri. The acquired company is a digital and flexographic printer of prime labels for the food, health, personal care, industrial, pharmaceutical and beverage markets. Only four days earlier, Resource Label announced the purchase of StickerGiant.com, a producer of labels and stickers sold via an online storefront. StickerGiant.com would appear to fill a space at the lower end of the market, serving small companies, somewhat of a departure in the label roll-up space which has been focused on higher volume label manufacturers.

While not the only private equity-backed consolidator in the label industry, Resource Label is an exemplar of how the process of secondary, and now tertiary, buyouts by professional investment companies have provided the financial fuel needed to run a virtually non-stop acquisition process. At Resource Label, the buyout professionals did not skip a beat after the company switched financial sponsors from First Atlantic Capital to Ares Management; the team completed three acquisitions in less than three months.



Resource Label Group is not the only PE-fueled platform consolidating the label industry, nor is it the only platform that has flipped multiple times from one financial sponsor to another. Fort Dearborn was established in 1925 as a general printing company. By 1930, the founder had decided that printing labels was the business to be in, and other than a diversion during World War II to print top-secret strategic topographic maps for the war effort, Fort Dearborn has been focused on labels, shrink sleeves and related products. Fort Dearborn is now owned by Clayton, Dubilier & Rice, its fourth financial sponsor. The seller of Fort Dearborn, Advent International, acquired the company in 2016 from KRG Capital Partners, which previously acquired the company from Genstar Capital in 2010, which previously acquired the company from the individual non-institutional owners in 2006. At the time of its entry into the world of private equity backed growth, Fort Dearborn had six plants and revenue of $190 million, and with this latest deal is now part of a $3 billion revenue roll‑up of roll‑ups.

Simultaneous with the purchase of Fort Dearborn, PE firm Clayton, Dubilier & Rice also purchased Multi‑Color Corporation from Platinum Equity. Multi‑Color, now a global producer of labels, was established in 1916 as a manufacturer of sheet‑fed three‑color printing presses. The owners soon decided to pivot and transitioned to printing labels rather than making the machines. A seminal event in the company’s history was the development in 1980 of the in‑mold label technology, in which labels are applied to plastic containers as the containers are being formed in the mold. Platinum Equity purchased Multi‑Color in a take‑private transaction in 2019, ending Multi-Color’s listing as a public stock which dated back to 1987. (For more, see Packaging Industry Consolidation in Every Direction – July 2021).

In addition to the above mentioned PE funds, there are others also chasing label companies: Mason Wells, a private equity fund based in Milwaukee, just formed another entry into the PE-backed roll-up of the label business with the dual acquisition of KDV Label in Waukesha, Wisconsin and its sister company I-Graphics, based in Loveland, Colorado. An additional recent entry into the mix is the mega fund H.I.G. Capital, no stranger to print-centric businesses. This past summer, H.I.G. acquired label and flexible packaging company Chromatic Productions, establishing its label platform company. Dunes Point Capital, based in Rye, New York, started out small and launched its label roll‑up platform with the acquisition of Label Graphics Manufacturing in Little Falls, New Jersey. Not to be left out, in December 2020, Morgan Stanley Capital Partners acquired AWT Labels & Packaging from Mason Wells (yes, that Mason Wells, the same PE fund that just jumped back into the label business last month).

And let’s not leave out Brook & Whittle, the label platform now owned by Snow Phipps Group, which acquired the company in 2017 from RFE Investment Partners and Charter Oak Equity. Other PE-backed acquisition platforms in the label segment include Inovar, based in Dallas, with financial sponsorship from AEA Investors, and Fortis Solutions Group, based in Virginia Beach and operating 14 plants across the US, with financial backing from Main Post Partners.

Not all transactions in the label manufacturing segment are driven by large private equity-backed roll‑ups. The Kennedy Group, a family-owned and family-managed manufacturer of labeling and packaging, acquired the business of Color Label in St. Louis, Missouri.* Based in Willoughby, Ohio, The Kennedy Group has production capabilities in pressure sensitive labels, roll-fed film, digital labels, and RFID labels and is actively seeking opportunities to grow via strategic acquisitions, offering an alternative to the PE-backed roll-ups.

Direct Mail and Commercial Printing

Postal Center International, a direct mail shop in Weston, Florida, announced the acquisition of Arrowmail in nearby Miami. In addition to direct mail services, PCI processes transactional print and provides presort services. The company recently announced its plan to establish a series of regional sites across the country, starting with a leased 100,000 square foot facility in San Antonio, Texas. According to the CEO, the company is seeking to “drive scale quickly, not only in San Antonio but also in other high-impact and highly centralized regions around the country” as part of the company’s nationwide expansion of regional office, production and presort mailing sites. Based on our conversations and mandates with other owners in the direct mail and transactional print segments, we suspect that PCI’s strategy of expanding direct mail production capability across several regions is being driven in direct response to the slowdown in US postal delivery time standards.

The commercial printing segment was noticeably quiet in September, with the exception of the acquisition of Taylored Printing by Richmond, Virginia-based Worth & Higgins, a diversified print provider of sheetfed offset, digital printing, wide format, and signage.

There has been a notable, but not yet dramatic, increase in the number of commercial printing companies filing bankruptcy, the majority of which have filed under Chapter 7 of the Code, which means the company is being liquidated without the opportunity to reorganize as is allowed under Chapter 11. This increase in bankruptcies has been expected since the outbreak of Covid-19, forestalled by the distribution and forgiveness of the ubiquitous PPP loans, the benefit of which is likely now, or soon will be, exhausted. Another factor that may increase pressure on financially challenged companies, especially within the commercial printing segment which has its own unique headwinds, is the unwinding of Covid-support measures which is likely to lead to an increase in the number of loans classified as non-performing, with corresponding increased pressure from lenders on borrowers.

Promotional

Commercial printing companies have increasingly been offering promotional and specialty advertising items to their customers. What was once a separate differentiated business is now being included in the integrated mix of marketing production and support services under the umbrella of many commercial printing companies.

Grossman Marketing, a 111-year old Massachusetts company, acquired Symbol Marketing & Promotions. Founded in 1910 by the current owners’ great grandfather as the Massachusetts Envelope Company, the company has transitioned from envelope manufacturing to a pure promotional products and print distributorship business model. The current acquisition is the Grossman brothers’ eighth, all of which strategically support its asset-light service model.

Reno Type, a printing and mailing company, acquired CDMS, a promotional products distributor in nearby Sparks, Nevada. BR Printers, based in San Jose, California, a commercial printing and book manufacturing company with extensive production capabilities, certainly not an asset-light company, acquired Casa del Mar, a San Diego-based promotional products distributor. While not every commercial printing company is embracing the promo business, the trend towards becoming an integrated marketing service provider will continue, often via an acquisition strategy.

* Graphic Arts Advisors, publisher of The Target Report, provided outreach to identify the opportunity and served as exclusive advisors to The Kennedy Group in this transaction.

   
2021 September - Mergers and Acquisitions in the Printing, Packaging, Paper & Related Industries

Deal Party #1
(Surviving Entity)
Pre-Deal
Revenues
(US$Mil)


Party #1 Address


Deal Party #2
Pre-Deal
Revenues
(US$Mil )


Party #2 Address
Date
Deal
Public
Deal
Value
(US$Mil)

Deal Structure
(Intermediary)


Notes

Press
Release
Grossman Marketing No Data Somerville, MA  Symbol Marketing & Promotions No Data Manchester, NH 9/27/21 No Data Acquisition Promo products distributor Link
CherryRoad Media No Data Parsippany, NJ Leavenworth Times
(13 titles) (Prop. Gannett)
No Data Leavenworth, KS 9/24/21 No Data Acquisition Community newspapers Link
The Kennedy Group
(Advised by Graphic Arts Advisors)
No Data Willoughby, OH Color Label No Data St. Louis, MO 9/23/21 No Data Asset Acquisition
(Graphic Arts Advisors)
Labels printing Link
Resource Label Group
(Port co. Ares Management)
No Data Franklin, TN Ample Labels No Data Nixa, MO 9/21/21 No Data Acquisition Labels printing Link
Resource Label Group
(Port co. Ares Management)
No Data Franklin, TN StickerGiant.com No Data Longmont, CO 9/17/21 No Data Acquisition Label printing & online store Link
The Harlan Newspapers
(sub. Blackbird)
No Data Harlan, IA Glenwood Opinion-Tribune
(Prop. Paxton Media Group)
No Data Glenwood, IA 9/16/21 No Data Acquisition Community newspapers Link
Mason Wells No Data Milwaukee, IL I-Graphics No Data Loveland, CO 9/16/21 No Data Acquisition
(Taureau Group)
Label printing & converting Link
Mason Wells No Data Milwaukee, IL KDV Label No Data Waukesha, WI 9/16/21 No Data Acquisition
(Taureau Group)
Label printing & converting Link
Monotype Imaging Holdings No Data Woburn, MA Hoefler & Co No Data New York, NY 9/15/21 No Data Acquisition Type foundry (fonts) Link
Postal Center International $200.0 Weston, FL Arrowmail No Data Miami, FL 9/15/21 No Data Acquisition Direct mail printing Link
PPC Flexible Packaging
(Port co Morgan Stanley Capital)
No Data Buffalo Grove, IL Consumer Packaging Group No Data Hartland, WI 9/10/21 No Data Acquisition
(TKO Miller)
Packaging prototypes Link
Lone Star Funds No Data Dallas, TX XSYX
(Div. Flint Group)
No Data Stuttgart, Germany 9/8/21 No Data Acquisition Plates & prepress equipment Link
Worth & Higgins $33.0 Richmond, VA Taylored Printing No Data Yorktown, VA 9/3/21 No Data Acquisition Commercial printing Link
Reno Type No Data Reno, NV CDMS No Data Sparks, NV 9/2/21 No Data Acquisition Promo products distributor Link
BR Printers $21.6 San Jose, CA Casa del Mar No Data San Diego, CA 9/1/21 No Data Acquisition Promo products distributor Link
H.I.G. Capital No Data Miami, FL Jackson Paper Manufacturing No Data Sylva, NC 9/1/21 No Data Acquisition Recycled paper manufacturing Link

   
2021 September - Bankruptcy Filings in the Printing, Packaging, Paper & Related Industries



Filing Party

Date
Case
Filed
Pre-Petition
Revenues
(US$Mil)



Case #



Filing Party Address



Circuit



Region & City



Judge



Attorney for Debtor



Notes
Chapter 11 Filings:
The Harman Press Inc. 9/20/21 No Data 21-11544 North Hollywood, CA 9th Central CA
Woodland Hills
Maureen Tighe Thomas B. Ure Commercial printing
Chapter 7 Filings:
Allegiant Marketing Group
aka AMG
9/27/21 No Data 21-12573 Edmond, OK 10th Western OK
Oklahoma City
Sarah A. Hall Dekovan L. Bowler Marketing & direct mail
Colorado Litho, Inc. 9/22/21 No Data 21-14850 Westminster, CO 10th Colorado
Boulder
Elizabeth E. Brown Robert S. Sutton Commercial printing
Target Printing and Graphic Communications Inc. 9/17/21 No Data 21-17316 Rochelle Park, NJ 3rd New Jersey
Newark
Vincent F. Papalia David L. Stevens Printing & copying
Graphics Now, Inc. 9/15/21 No Data 21-02393 Greenville, SC 4th South Carolina
Columbia
Helen E. Burris Randy A. Skinner Commercial printing
   

2021 September - Non-Bankruptcy Closures in the Printing, Packaging, Paper & Related Industries



Closed Company / Facility

Date of Closure
Pre-Closure
Revenues
(US$Mil)



Closing Address
Related Party Related Party
Address
Date Closure Public


Notes

Press
Releases
RR Donnelley  - Printing facility 11/30/21 No Data Lewisburg, PA RR Donnelley Chicago, IL 9/20/21 Commercial printing
(Formerly Moore Wallace facility)
Link
Unique Impressions Printing 11/4/21 No Data Phoenix, AZ None N/A Sep-21 Commercial printing - trade shop Link
F.P. Horak 11/11/21 No Data Bay City, MI None N/A Sep-21 Restructuring, realignment & move Link
El Paso Times - Printing facility 10/4/21 No Data El Paso, TX Gannett McLean, VA 9/10/21 Print production moving to Juarez, Mexico Link