Tuesday, June 5, 2012

Why are so Many Billionaires Buying Newspapers and Paper Mills? – May 2012 M&A Activity

If ink-on-paper technology is really headed for the graveyard, why are so many billionaires buying newspapers and paper mills? As we know, television did not kill the radio, and it just may be possible, even likely, that digital mobile media will not spell the demise of printed forms of communication. At least that seems to be the conclusion reached by some very smart folks who invested significant sums during the past couple months to buy assets that rely on the continued life of the printed word.

Berkshire Hathaway, managed by one of the world’s richest, and arguably one of the smartest, investors ever, purchased 63 newspapers from Media General. Lest the reader be too excited about Mr. Buffet’s vote of confidence in the newspaper business, it should be noted that Berkshire Hathaway hedged its bet; also investing in Media General’s remaining broadcast television, digital content and mobile media. Since Berkshire Hathaway traditionally only purchases companies that it intends to own long term, we feel safe in assuming that the “Oracle of Omaha” sees a positive future for his new network of newspapers.

Another billionaire, Thomas Hicks, Texas master of the leveraged buyout and former owner of the Texas Rangers, is behind the purchase of Appleton Papers. Appleton, long known for some of the most unusual coated papers in the printing industry, holds the number one position globally in the production of carbonless paper, the slightly-sticky multi-colored paper used in impact printers. In a nod to a new direction for the company, the corporate name will change to Appvion, signaling management’s intent to branch out into other forms of specialty coatings and the technology behind carbonless paper, microencapsulation. Nonetheless, we think that it’s likely that the company will continue as a manufacturer of specialty papers, and that Mr. Hicks is betting on a future for the paper industry.

In related deals, Versa Capital Management acquired four newspapers from Freedom Communications and the Watermill Group, a Boston private equity firm, acquired Manistique Papers. Manistique Papers operates a specialty mill in the Upper Michigan peninsula that manufactures uncoated printing and writing papers using exclusively 100% recycled fiber. All told, these deals point to a positive future for ink-on-paper technologies.

Ovation Graphics is back for its second major deal since first coming on the scene earlier this year in January, acquiring the Motheral Printing Company in Fort Worth, Texas. Will there be a second encore performance from Ovation this year?

Of note in the continuing migration to digital media, RR Donnelley is back with another “e-transaction”, acquiring EDGAR Online, the service that corporate finance and investment professionals use to manage and file required information. JedFam Group bought the assets in the bankruptcy proceeding of BroadSign International, the digital signage software provider. Quark, at one time far and away the default choice in page layout software, long since dethroned by Abobe’s InDesign, and now owned by Platinum Equity, has stepped into cloud-based software with its acquisition of Mobile IQ digital publishing for tablet and mobiles applications.

The big news in May bankruptcies was the Chapter 11 filing by Houghton Mifflin Harcourt Publishing Co., the venerable publisher of distinguished authors such as Mark Twain and J.R.R. Tolkien. Unsecured creditors listed in the case include RR Donnelley and Williams Lea, each owed more than $20 million in trade debt.

And finally, we must make note of a small printer in Duluth, Georgia that filed for liquidation under Chapter 7 of the Bankruptcy Code. We hope that for the owner, who operated the business under the AlphaGraphics name, the printing business lived up to the corporation’s official name, “On the Way to Paradise, Inc.” 

2012 May - 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


JedFam Group No Data Montreal, QC BroadSign International No Data Montreal, QC 5/31/12 No Data Asset sale in bankruptcy Digital signage software Link
Bain Capital No Data Boston, MA Consolidated Container Co. No Data Atlanta, GA 5/31/12 No Data Acquisition Plastic containers Link
Ovation Graphics No Data Fort Worth, TX F.L. Motheral $29.9 Fort Worth, TX 5/26/12 No Data Acquisiton Commercial printing Link
TCP Printing
(DBA Typecraft)
No Data Pittsburgh, PA MarketPlace Direct No Data McKees Rocks, PA 5/25/12 No Data Acquisition
Commercial printing Link
Quark No Data Denver, DO Mobile IQ No Data San Francisco, CA 5/29/12 No Data Acquisition Digital publishing Link
RR Donnelley $10,018 Chicago, IL EDGAR Online $27.8 Rockville, MD 5/22/12 $70.5 Acquisition Online financial reporting Link
Premier Color Corporation
(Atkins Printing)
No Data Manchester, ME Atkins Printing No Data Waterville, ME 5/18/12 No Data Asset Acquisition Print sourcing & distribution Link
Hicks Acquisition Co II
No Data Dallas, TX Appleton Papers $860.0 Appleton, WI 5/18/12 $675.0 Acquisition Printing papers Link
Versa Capital Management No Data Philadelphia, PA Freedom Communications No Data Irvine, CA 5/17/12 No Data Acquisition - Partial Acquired 4 newspapers Link
Berkshire Hathaway $143,688 Omaha, NE Media General No Data Richmond, VA 5/17/12 $142.0 Acquisition - Partial
(Peter J. Solomon)
63 Daily & weekly newspapers Link
D&W Fine Pack No Data Fountain Inn, SC Clear Lam Packaging
Thermoforming Division
No Data Elk Grove, IL 5/17/12 No Data Add-on Acquisition Bakery & Food Containers Link
Nicolet Capital Partners No Data Chicago, IL Interflex Group $100.0 Wilkesboro, NC 5/16/12 No Data Acquisition
(Lincoln Intntl.)
Flexo, packaging Link
CP Graphics No Data Tucson, AZ ScoreBoardWhiz.com No Data San Diego, CA 5/11/12 No Data Acquisition Custom scoring cards Link
Domtar Corporation $5,612 Montreal, QC EAM Corporation $45.0 Jessup, GA 5/14/12 $65.0 Acquisition Absorbent composite materials Link
Premier Press No Data Portland, OR Vince's Diecutting No Data Portland, OR 5/8/12 No Data Acquisition Diecutting & related finishing Link
Field Ventures No Data Northbrook, IL Primary Packaging No Data Bolivar, OH  5/7/12 No Data Acquisition
(Mesirow Financial)
Printed poly film and bags. Link

2012 May - Bankruptcy Filings in the Printing, Packaging, Paper & Related Industries

Filing Party

($Mil )

Case #

Filing Party Address


Region & City


Attorney for Debtor

Chapter 11 Filings:
Nexgen Press Corp 5/23/12 No Data 12-23240 Hamilton, NJ 3rd New Jersey
Trenton, NJ
Kathryn C. Ferguson Barry W. Frost Printing & copying
Gohrs Printing Services, Inc. 5/24/12 No Data 12-10758 Erie, PA 3rd Western PA
Erie, PA
Thomas P. Agresti Lawrence C. Bolla  Commercial printing
Houghton Mifflin Harcourt Publishing Co. 5/21/12 No Data 12-12171 Boston, MA 2nd Southern NY
New York, NY
Robert E. Gerber Jeffrey D. Saferstein Book publishers
Art Horizons, Inc. 5/8/12 No Data 12-24834 Batesville, MS 6th Western TN
Memphis, TN
George W. Emerson Jr. Steven N. Douglass Art prints & posters
Chapter 7 Filings:
San Francisco Guide, Inc. 5/31/12 No Data 12-31651 San Francisco, CA 9th Northern CA
San Francisco, CA
Thomas E. Carlson Ning Yu Publisher
Prairie Offset Printing & Marketing Solutions, Inc. 5/8/12 No Data 12-32774 Shakopee, MN 8th Minnesota
St. Paul, MN
Gregory F. Kishel Paul Ross Trade & commercial printing
On the Way to Paradise, Inc.
(AKA AlphaGraphics)
5/7/12 No Data 12-61883 Duluth, GA 11th Northern GA
Atlanta, GA
Paul W. Bonapfel Christopher J. York Printing & copying