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)
($Mil )

Party #1 Address

Deal Party #2
($Mil )

Party #2 Address

Deal Structure


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
No Data Kansas City, MO Graphic Services Printing No Data Kansas City, MO 10/21/13 No Data Merger Commercial printing Link
Mail Print
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)
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

($Mil )

Case #

Filing Party Address


Region & City


Attorney for Debtor

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
C. Kathryn Preston Michael T Gunner  Printing , copying & promotional items
Washington Promotions & Printing 10/8/13 No Data 13-27070 Bethesda, MD 4th Maryland
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
($Mil )

Closing Address
Related Party Related Party
Date Closure Public


No Plant Closures Found this Month --- --- --- --- --- --- --- ---