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)
($Mil )

Party #1 Address

Deal Party #2
($Mil )

Party #2 Address

Deal Structure


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
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
Packaging, food & consumer Link
Canfield & Tack $14.0 Rochester, NY Dellas Graphics $6.0 Syracuse, NY 11/13/12 No Data Acquisition
Commercial print & services Link
Graphic Visual Solutions No Data Greensboro, NC Hutchison Allgood No Data Winston-Salem, NC 11/9/12 No Data Acquisition
Commercial print & services
($25Mil combined revenue)
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

($Mil )

Case #

Filing Party Address


Region & City


Attorney for Debtor

Chapter 11 Filings:
Ram's Die Cutting & Finishing, Inc. 11/8/12 No Data 12-35154 Chino, CA 9th Central CA
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
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
James K. Coachys Mark E. Kuntz Printing & copying
Excalibur Graphics, Inc. 11/13/12 No Data 12-78449 Marietta, GA 11th Northern GA
James R. Sacca M. Denise Dotson Commercial printing
Fokus, Inc. 11/8/12 No Data 12-36630 Kenilworth, NJ 3rd New Jersey
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
Marcia Phillips Parsons Dave B. Jordan Commercial printing