Saturday, December 7, 2013

Private Equity Interested in Printing if it’s Packaging – November 2013 M&A Activity

Private equity interest in packaging printing and manufacturing remains high; while in general there is much less interest in the commercial printing and publishing sectors. This was the overwhelming response that I received during the past month in my conversations with partners and professionals from more than sixty private equity firms, in which I asked about their interest in the various industries that put “ink on substrates.” My impressions were borne out as PE funds announced significant deals in November, all related to the packaging sector.

Multi Packaging Solutions, recently acquired by Madison Dearborn Partners from Irving Place Capital, announced that the company has agreed to a merger with Chesapeake Services Limited, backed by The Carlye Group. Multi Packaging Solutions is a US-based packaging printer with several locations in Europe. Chesapeake Services is a UK-based packaging printer with multiple plants throughout Europe, several plants in the US, and two plants in China. Both companies have a major commitment to the healthcare and pharmaceutical industries, with many facilities dedicated to the special needs of these markets. Each company also has expertise in consumer branded packaging; Multi Packaging Solutions brings strengths in the entertainment industry; and Chesapeake Services brings four plants that manufacture plastic containers to the combined enterprise. Together, these two PE-backed companies begin to form a new global powerhouse in the business of printing packaging.

Transilwrap, a manufacturer, converter, and distributor of plastic films, was sold by its PE owner, Nicolet Capital Partners, to another fund, The Jordan Company. The company’s products are used in a wide variety of printing and packaging applications.

Paper merchants were active. Mac Papers, the leading distributor of paper to printing companies in the Southeast US, hopes to offset the declining volume of its printing papers business with its acquisition of Alles. The acquired company distributes a wide variety of packing supplies and equipment. Rather than branching out from its paper distribution business, Bradner Central, a paper merchant with locations throughout the Midwest and Texas, called it quits after more than 160 years as a family-owned company, and agreed to be acquired by Central National-Gottesman. This is Central National-Gottesman’s sixth acquisition of a paper merchant in the past four years, continuing the trend towards vertical integration of the fine printing paper business, exemplified by International Paper’s xpedx business unit.

In addition to announcing its merger in November, Multi Packaging Solutions is listed on our deal log for plant closures. The company will be shutting down its printing facility in Terre Haute, Indiana. The plant, formerly owned by Ivy Hill, produces packaging for audio and video products. Demand for those products has declined, leading to the decision to close the plant.

In a continuation of a trend we have noted before, another regional newspaper has announced that it plans to shut down its own printing plant and outsource the printing of its paper to another newspaper with a more efficient printing facility. In making the announcement, the publisher of the Star-Telegram of Fort Worth, Texas, stated that he planned to focus on the paper’s core competencies and produce quality journalism for readers and serve advertisers with print and digital solutions. The Dallas Morning News organization landed the contract to print the Star-Telegram.



2013 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
Jordan Company No Data New York, NY Transilwrap No Data Franklin Park, IL 11/22/13 No Data Acquisition Packaging films Link
Print NW No Data Lakewood, WA ABC Printing No Data Lacey, WA 11/20/13 No Data Acquisition Commercial printing Link
Jostens
(Sub. of Visant)
$1,155 Minneapolis, MN American Achievement No Data Austin, TX 11/19/13 No Data Acquisition Yearbooks & keepsakes Link
Multi Packaging Solutions No Data New York, NY Chesapeake Services Limited No Data Nottingham,
England, UK
11/19/13 No Data Merger Packaging
(combined $1.4Bil revenue)
Link
Safeguard
(Sub. of Deluxe)
$1,550 Dallas, TX Prime Business Solutions No Data Akron, OH 11/15/13 No Data Acquisition Printing & promotional items Link
Electronics for Imaging (EFI) $704.6 Foster City, CA Lector Computersysteme No Data Mönchengladbach,
Germany
11/13/13 No Data Acquisition MIS systems for printing Link
Central National-Gottesman
(Lindenmeyr Munroe)
No Data Purchase, NY Bradner Central No Data Elk Grove, IL 11/4/13 No Data Asset acquisition Paper merchants/distribution Link
SourceOne Output Technologies No Data Little Rock, AR Wheeler Printing No Data Hot Springs, AR 11/4/13 No Data Acquisition Commercial printing Link
Mac Papers No Data Jacksonville, FL Alles No Data Hialeah, FL 11/1/13 No Data Acquisition Packaging supply distribution Link
Creative Graphics No Data Prior Lake, MN B2B No Data St. Paul, MN 11/1/13 No Data Asset acquisition Marketing services Link


2013 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:
Marketing IV, Inc. 11/19/13 No Data 13-44895 Elmhurst, IL 7th Northern IL
Chicago
Janet S. Baer Richard G. Larsen  Commercial printing
Chapter 7 Filings:
DFDC Enterprises Inc 11/27/13 No Data 13-45911 Bloomingdale, IL 7th Northern IL
Chicago
Donald R. Cassling Timothy M. Hughes  Point-of-Purchase displays
Integrity Packaging 11/6/13 No Data 13-36946 Houston, TX 5th Southern TX
Houston
David R. Jones Matthew Scott Okin  Folding cartons


2013 November - 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
M&M Printing Dec-13 No Data Trenton, NJ None N/A 11/11/13 Printing & copying Link
Star-Telegram
Printing Facility
1st Qtr '14 No Data Edgecliff Village, TX The Dallas Morning News
(Gained printing contract)
Plano, TX 11/7/13 Newspaper outsourcing print operations Link
Multi Packaging Solutions - Printing Facility Oct-13 No Data Terre Haute, IN Multi Packaging Solutions New York, NY 11/4/13 Formerly an Ivy Hill plant Link

Friday, November 8, 2013

RR Donnelley buys CGX – Strategic Brilliance or Competitors’ Opportunity? – October 2013 M&A Activity

The printing industry was abuzz this past month with opinions about why Consolidated Graphics, the billion dollar master of the commercial printing rollup, agreed to be acquired by RR Donnelley. The deal, valued at $620 million plus assumption of Consolidated Graphics’ debt, did not reward the shareholders of Consolidated with a premium – the company sold out effectively at its current market price. Apparently top management at Donnelley liked what they saw, but only at a relative bargain price.

According to much of the buzz, many folks in the industry, myself included, view this deal as a marriage of strange bedfellows. The buyer is the undisputed printing industry behemoth that serves large corporate accounts through its integrated network of high volume facilities, sophisticated data management, and well-oiled corporate structure; the seller a collection of mid-market commercial printing shops mostly purchased from owner-operators during the 1990’s rollup craze in the printing industry.

Industry consultant and pundit Wayne Peterson wrote a cogent and somewhat compelling argument that Donnelley knows exactly what it’s doing, and that it will use the Consolidated Graphics network to deliver product locally to large corporate accounts that have signed onto its comprehensive “we do it all” print management solution. Printers that compete with Donnelley and Consolidated, most notably Dustin LeFebvre of Specialty Print Communications, have blown the battle bugle and urged independent printers to get into the ring and fight. The prize is the sales reps and customers that may feel that their “local” Consolidated printer is now just another cog in the giant Donnelley wheel. We have seen numerous comments that simply note the writer’s belief that Donnelley will consolidate Consolidated, closing plants once it absorbs as much of the top-line revenue as fits its own strategy. As readers of The Target Report know from our post reviewing August ’13 transactions, Donnelley is not sentimental about closing formerly very successful printing plants, having already closed five this year. Whichever way this plays out, I suspect that the independent mid-size commercial printer will be watching closely.

The Mittera Group acquired Wisconsin Web Offset. The company now has a portfolio of printing companies with combined sales of $95 million and operates eight facilities in the Midwest. In addition to this latest acquisition, the company markets its services under various brand identities including Rock Communications, Colorfx, Sundog Studios, and Catchfire Media. Colorfx has itself been listed on our deal log on three separate occasions during the past two years, having acquired Capital City Graphics, Acme Printing, and Demco Printing, all three in Iowa. The Mittera Group clearly is executing a strategy of growth through serial acquisitions within its current geographic range. Are we witnessing the beginning stages of another printing industry rollup now that Consolidated Graphics is disappearing as an independent company?

Publishers of regional newspapers and publications were active in October. Consistent with a current trend in the newspaper industry, which we noted earlier in the year, The Salt Lake Tribune is selling off its printing plant assets to concentrate on its editorial products and delivery of that content through digital media. The buyer of The Tribune’s interest in the printing plant, the Deseret News, will now print and distribute The Tribune’s print edition as well as its own. Freedom Communications, in Santa Ana, California, is back on our deal log. In May ’12, Freedom sold four Midwest newspapers to Versa Capital Management. This time they are the buyer of the Press-Enterprise newspaper in Riverside, California - the purchase included the printing facility as well as the publishing assets. In Lancaster, Pennsylvania, Engle Printing & Publishing purchased Lancaster Magazine from Brookshire Printing. Brookshire also sold off its commercial printing operation to a different buyer and announced plans to cease operations after the sales are completed.

Sandy Alexander in Clifton, New Jersey, having just completed the management buyback of the company from its private equity backers in August ’13, announced the acquisition of SALT Studios, a high-end retouching and computer graphics studio in New York City. This brings the web, sheetfed, and wide-format printer upstream into the creative realm, one of the three paths to diversification we have observed as commercial printers strive to become “marketing service providers” (MSP’s).

For the first time in the two and half years that we have been researching transactions in the printing, packaging, paper, publishing, and related industries, we did not find any Chapter 11 bankruptcy filings, and there were no reported plant closings. We found only two Chapter 7 liquidations of small printing companies that focused on selling promotional items. Following the reduced number of bankruptcy filings in September, it appears that failures, at least those requiring protection of the bankruptcy court, have subsided, while M&A transactions continue at a brisk pace.



2013 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
The Mittera Group No Data Des Moines, IA Wisconsin Web Offset No Data Brookfield, WI 10/31/13 No Data Acquisition
(Eisen Fox & Company)
Catalog & publication printing Link
RR Donnelley $10,280 Chicago, IL Consolidated Graphics $1,050 Houston, TX 10/24/13 $620.0 Acquisition Commercial printing Link
Preferred Packaging Partners No Data Providence, RI Matlet Group No Data Pawtucket, RI 10/23/13 $8.5 Recapitalization Commercial print & packaging Link
Progressive Printers No Data Dayton, OH Thomas Graphics No Data Dayton, OH 10/23/13 No Data Merger Commercial printing Link
Cooley Group No Data Rochester, NY Proforma I.F. Printing Services No Data Rochester, NY 10/22/13 No Data Acquisition Promotional items & printing Link
Mail Print
(NextPage)
No Data Kansas City, MO Graphic Services Printing No Data Kansas City, MO 10/21/13 No Data Merger Commercial printing Link
Mail Print
(NextPage)
No Data Kansas City, MO L&L Manufacturing No Data Independence, MO 10/21/13 No Data Merger Commercial printing Link
Deseret News No Data Salt Lake City, UT Salt Lake City Tribune
(Interest in Printing Plant)
No Data West Valley City, UT 10/21/13 No Data Asset acquisition Newspaper printing plant Link
Electronics for Imaging (EFI) $652.1 Foster City, CA Metrix Software No Data Edmonds, WA 10/17/13 No Data Acquisition MIS systems for printing Link
Christopher Pierce No Data Lisbon, ME The Dingley Press
(Division of The Sheridan Group)
No Data Lisbon, ME 10/10/13 No Data Acquisition Catalog printing Link
Freedom Communications Holdings No Data Santa Ana, CA The Press Enterprise No Data Riverside, CA 10/10/13 $27.3 Asset purchase Newspaper publishing Link
Engle Printing & Publishing No Data Mount Joy, PA Lancaster County Magazine
(Division of Brookshire Printing)
No Data Lancaster, PA 10/9/13 No Data Acquisition Local publishing Link
Spectrum Printing No Data East Petersburg, PA Brookshire Printing
(Commercial Printing Division)
No Data Lancaster, PA 10/9/13 No Data Acquisition Commercial printing Link
Boxwood Capital
(Div now "Outdoor Image")
No Data Richmond, VA Formetco
(Grand Format Division)
No Data Duluth, GA 10/8/13 No Data Acquisition Grand format printing Link
EM Printing No Data Bartlett, TN Jaco-Bryant Printers No Data Memphis, TN 10/8/13 No Data Merger Commercial printing
(combined $7.7Mil revenue)
Link
Cobe Capital No Data New York, NY Staples Printing Systems Division
(European division)
No Data Amsterdam, Netherlands 10/7/13 No Data Acquisition Printing Equipment Distributor Link
Sandy Alexander No Data Clifton, NJ SALT Studios No Data New York, NY 10/1/13 No Data Acquisition High-end retouching Link


2013 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:
No Chapter 11 Filings Found this Month --- --- --- --- --- --- --- --- ---
Chapter 7 Filings:
Uni-Print Products 10/10/13 No Data 13-58051 Mount Sterling, OH 6th Southern OH
Columbus
C. Kathryn Preston Michael T Gunner  Printing , copying & promotional items
Washington Promotions & Printing 10/8/13 No Data 13-27070 Bethesda, MD 4th Maryland
Greenbelt
Thomas J. Catliota Jeffrey M. Sherman  Printing , copying & promotional items


2013 October - 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
No Plant Closures Found this Month --- --- --- --- --- --- --- ---