Monday, December 3, 2012

Will Private Equity Accelerate Migration to Digital Content Delivery in Education? – November 2012 M&A Activity

Financial reporting beats out educating students in the McGraw-Hill split. On the day that McGraw-Hill announced that it had reached a final agreement to split into two entities, its stock notched up again after a year-long rise since the original announcement that it would jettison the textbook publishing division and retain its financial reporting unit. McGraw-Hill Education, along with other publishers in the education sector, has struggled as governments have cut back on textbook purchases, and the migration of educational content to electronic and on-demand print delivery systems accelerates.

If there is any doubt that McGraw-Hill felt that it was shedding what it views as a long term drag on its performance, the buyer, Apollo Global Management, is a self-proclaimed group of “contrarian, value-oriented investors with significant distressed expertise.” An analyst quoted in Bloomberg opined that the educational division is “migrating to a more subscription-based business model, which would have more predictable revenues, and could conceivably have better profitability because you could eliminate the manufacturing and inventory costs. It’s all about figuring out ways to distribute your content and broaden its appeal in the market.” For the book printing industry, the message is clear – expect Apollo to push down on the throttle and accelerate the change to non-print delivery channels.

For parents of college students, and certainly the students themselves, it’s hard to get upset about the move to digital materials in education. Who in either demographic has not complained about the high cost of oversized textbooks, too heavy to carry to class, and often with hundreds of unread pages at semester’s end? For me, it was an easy decision to buy our graduate student a Kindle last year. She can download PDF’s as needed, and purchase only those textbooks where print really makes a difference (she’s studying art history, so beautifully printed books still add tremendous value).

Other deals announced in November include three large transactions in the packaging sector, all purchases of European printers by North American companies. Graphic Packaging Holding, of Marietta, Georgia, was behind two of the deals, purchasing specialists in food and consumer products. In the third packaging deal, CCL Industries of Toronto, Canada, picked up a Scotland printer of labels for distillers of Scotch whiskey and other spirits.

On the bankruptcy side of the ledger, there were several filings of small printing companies, all of which chose to file for Chapter 7 liquidation rather than attempt to restructure in Chapter 11. A vanity press publisher, Pentland Press, apparently no longer attracted to what it saw in the mirror, also filed for liquidation. We found one company, a die cutter, willing to give restructuring in bankruptcy a go, filing for Chapter 11 in central California.



2012 November - 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
CCL Industries $1,268 (CN) Toronto, ON John Watson & Co. Ltd. £12.0 Glasgow, Scotland 11/30/12 No Data Acquisition Spirits labels Link
Graphic Packaging Holding $4,206 Marietta, GA A&R Cartons
(Beer & Beverage Sector)
No Data Netherlands 11/28/12 € 26.0 Acquisition
(Cash+Debt)
Packaging, food & consumer Link
Apollo Global Management $172 New York, NY McGraw Hill Education $2,300 New York, NY 1/26/12 $2,500 Acquisition Educational books & services Link
Arandall No Data Menomonee Falls, WI Schumann Printers No Data Fall River, WI  11/26/12 No Data Strategic Partnership Direct mail, publications Link
Electronics for Imaging (EFI) $591.6 Foster City, CA Technique No Data Leeds, UK 11/19/12 No Data Acquisition MIS/ERP systems for publishers & printers Link
Graphic Packaging Holding $4,206 Marietta, GA Contego Cartons $260.0 Bagshot, UK 11/16/12 £81.0 Acquisition
(Cash+Debt)
Packaging, food & consumer Link
Canfield & Tack $14.0 Rochester, NY Dellas Graphics $6.0 Syracuse, NY 11/13/12 No Data Acquisition
(NAPL)
Commercial print & services Link
Graphic Visual Solutions No Data Greensboro, NC Hutchison Allgood No Data Winston-Salem, NC 11/9/12 No Data Acquisition
(NDP) (NAPL)
Commercial print & services
($25Mil combined revenue)
Link
Vision Integrated Graphics Group No Data Chicago, IL InfoComm & Wagner Printing No Data Freeport, IL 11/5/12 No Data Tuck-in of sales Diversified Graphic Services Link

2012 November - 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:
Ram's Die Cutting & Finishing, Inc. 11/8/12 No Data 12-35154 Chino, CA 9th Central CA
Riverside
Meredith A. Jury David R. Chase Bindery services
Chapter 7 Filings:
Pentland Press, Inc.
(DBA Ivy House Publishing Group)
11/28/12 No Data 12-08385 Raleigh, NC 4th Eastern NC
Raleigh
J. Rich Leonard Philip W. Paine Vanity press book publishing
Advanced Digital Graphics 11/27/12 No Data 12-14333 Moorpark, CA 9th Central CA
Los Angeles
Peter Carroll Daniel A. Higson Digital printing
Kokomo Quick Print, Inc. 11/14/12 No Data 12-13459 Kokomo, IN 7th Southern IN
Indianapolis
James K. Coachys Mark E. Kuntz Printing & copying
Excalibur Graphics, Inc. 11/13/12 No Data 12-78449 Marietta, GA 11th Northern GA
Atlanta
James R. Sacca M. Denise Dotson Commercial printing
Fokus, Inc. 11/8/12 No Data 12-36630 Kenilworth, NJ 3rd New Jersey
Newark
Donald H. Steckroth  Melinda D. Middlebrooks  Photo graphics & signage
Universal Business Forms Inc. 11/2/12 No Data 12-08905 Carolina, PR 1st Puerto Rico
San Juan
Mildred Caban Flores Jose M. Prieto Carballo Business forms
Love Graphics 11/1/12 No Data 12-51979 Greeneville, TN 6th Eastern TN
Greeneville
Marcia Phillips Parsons Dave B. Jordan Commercial printing

Sunday, November 4, 2012

Does the Vertis “Chapter 33” Signal the End for Printing industry’s Best Known Names? – October 2012 M&A Activity

Vertis, the financially challenged publisher of ubiquitous newsprint advertising inserts, now qualifies as a serial bankruptcy filer. Vertis filed Chapter 11 for the third time (a rare, but not unheard of, “Chapter 33”), in anticipation of the sale of its assets to Quad Graphics. In related filings, two other affiliated companies, both venerable industry names, Webcraft and American Color Graphics, filed Chapter 11 on the same day as Vertis, each also filing motions with the Bankruptcy Court for Joint Administration with Vertis. In an amazing list of aliases, Vertis and its co-filers indicate that their businesses are “aka”: Vertis Advertising Solutions Services, Image Tap, Vertis Logistics, Vertis Communications, Vertis Creative, Vertis Logistics Services, Adout, Lot 44, Printco, Vertis Advertising Production Services, Forte Studios, Vertis Receivables II, Enteron Group, Imagination Brewery, LTC Group, The Color Company, American Color Packaging, ACG Holdings, Gowe Printing Company, ACG Canada, GBP Industries, American Images, Sullivan Graphics, Sullivan Marketing, American Color Premedia, American Color, Flexi-Tech Graphics, AC Packaging, The Visus Group, Sullivan Media Corporation, Digiscope, American Color Print, American Images of North America, Vertis Communications, Shakopee Valley Printing, AC Studios of American Color, AC Studios, 24* Street Group, American Color Print, Mail Efficiency, Vertis Newark, 5 Digit Plus, American Color Graphics, Webcraft and of course, just plain “Vertis”. I suspect that if Quad Graphics prevails in its bid to acquire the Vertis assets in the pre-packaged 363 sale process, many of these names will be retired and Vertis will be out of the bankruptcy business.

SGS International, backed by Onex Partners III, is on the deal log for the second month in a row, acquiring Stevenson Color, a packaging and prepress company in Cincinnati, OH. This follows its acquisition last month of the packaging prepress division of Vertis (presumably sold by Vertis in preparation for the aforementioned bankruptcy filing). Do these transactions indicate the formation of a major new presence in the brand management and deployment space now dominated by Schawk and a couple other global players?

FujiFilm Holdings International purchased the Business Service Provider division of Salmat Ltd. In Australia, rebranding the service under its Fuji Xerox name, focusing on its ability to manage data and documents as the company continues to evolve from its traditional strengths in manufacturing film, plates and processing equipment.

In an unusual vertical move up the value chain in 2010, Mohawk Papers acted as a venture capital investor behind Pinhole Press, an online photo printing service that prints photos for consumers. Dedicated to “beautifully simple” products, the service prints exclusively on papers made by Mohawk Fine Paper, a mill that was one of my favorites in my early career when I specified paper for clients. I often suggested the mill’s premier paper, “Mohawk Superfine,” when a client asked for my advice, and they wanted a superb and subtle finish in an uncoated sheet. I still remember the look and feel of the finely textured paper and the even and smooth lay-down of a double-hit of super warm red. Those uncoated sheets sure were super.



2012 October - 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
SGS International No Data Louisville, KY Stevenson Color No Data Cincinnati, OH 10/23/12 No Data Acquisition Packaging & retail prepress Link
liveBooks No Data Sausalito, CA Pinhole Press, Pinhole Pro No Data Waterford, NY 10/16/12 No Data Acquisition Printed photo gifts Link
FujiFilm Holdings Corporation ¥2,195 Tokyo, Japan Business Service Provider
Salmat Ltd.
 AU$316 Matraville, Australia 10/11/12  AU$375 Acquisition Document processing Link
Quad Graphics $4,324 Sussex, WI Vertis Communications $1,100 Baltimore, MD 10/11/12 $258.5 363 Asset purchase Advertising inserts Link
Revolution Capital Group No Data Los Angeles, CA Tampa Tribune No Data Tampa. FL 10/9/12 $9.5 Acquisition Newspaper publisher Link
Wingate Partners No Data Dallas, TX Nekoosa Coated Products No Data Nekoosa, WI 10/2/12 No Data Acquisition Mfg. of specialty papers Link
Herrmann Printing & Litho No Data Pittsburgh, PA Enhanced Digital Printing No Data Export, PA 10/2/12 No Data Merger Cross-media commercial print Link
Sartori Software No Data Seattle, WA SAP Postalsoft Presort No Data Walldorf, Germany 10/2/12 No Data Acquisition Mailing prep software Link
Electronics for Imaging (EFI) $591.6 Foster City, CA Online Print Solutions (OPS) No Data Sydney, Australia 10/1/12 No Data Acquisition Web-to-Print applications Link



2012 October - 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:
Tech Bindery, Inc. 10/10/12 No Data 12-44046 Santa Fe Springs, CA 9th Central CA
Los Angeles
Neil W. Bason Marcus Gomez Bindery services
Vertis 10/10/12 $1,100 12-12823 Baltimore, MD 3rd Delaware
Wilmington
Mary F. Walrath Jason M. Madron Advertising inserts
American Color Graphics 10/10/12 No Data 12-12826 Baltimore, MD 3rd Delaware
Wilmington
Mary F. Walrath Jason M. Madron Filed for Joint Administration w/ Vertis
Webcraft 10/10/12 No Data 12-12822 Baltimore, MD 3rd Delaware
Wilmington
Mary F. Walrath Jason M. Madron Filed for Joint Administration w/ Vertis
Chapter 7 Filings:
GRL Packaging, LLC 10/31/12 No Data 12-25391 New Castle, PA 3rd Western PA
Erie, PA
Carlota M. Bohm  Frank G. Verterano Corrugated boxes & displays
Fife Packaging 10/17/12 No Data 12-13204 Hooksett, NH 1st NH
Manchester
J. Michael Deasy Kevin P/ Chrisholm Beverage carriers
Superior Mailing & Printing Services, Inc. 10/9/12 No Data 12-62615 Richmond, MI 6th Eastern MI
Detroit
Walter Sharpero Michael A. Greiner Printing and mail services