Paper - that basic and most fundamental substrate of our industry - was at the core of a wide variety of deals announced in January, and those deals are likely to impact future supply and pricing. Assuming that the decline in demand for printed products levels off or slows down at some point, as a result of the transactions announced, printers are likely to have less available supply and a more limited choice of suppliers to pick from when they are sourcing paper in the future.
Right now, the demand for paper continues to decline. In response, two of the largest remaining US companies that manufacture printing papers reached out to each other and plan to merge. Drowning in debt, they apparently hope to hold each other above the surface. In a deal reported as “complex” and “essentially all debt,” Verso Paper announced that it was acquiring NewPage Holdings, forming the largest manufacturer of coated printing papers remaining in the US. However the buyers, Verso, are not really buying NewPage, rather they have put together a deal structure in which Verso will provide management and other services to NewPage, but NewPage will be kept at arms’ length as a separate company. In other words, “if we make it to shore, then great, we’re partners,” but “if you drown brother, well then thanks for the fees and services, and see you at your funeral.” Could this turn out to be an example of tying two rocks together, in hopes that they will float?
The business of distributing paper is also set to complete another round of consolidation. Not too long ago, paper distributors were mostly family-owned and managed enterprises. Many of those formerly independent companies were rolled up into two competing mega-distributors, Xpedx (owned by International Paper) and Unisource (owned by Bain Capital and Georgia-Pacific). Through a series of maneuvers, Xpedx will be spun off, and then Unisource will be merged into the new entity. Although margins are paper-thin for these distribution giants, the combined entity will reportedly be able to easily handle payments on the debt planned for the new enterprise. Xpedx is projecting combined revenues for the new company in the $9 billion to $10 billion range. With reasonable debt levels, and additional product offerings that may offset the trend of declining demand for printing papers, such as wide format and digital supplies, it appears that the new company will have enough buoyancy to stay afloat.
Gould Paper, another significant player in the US paper distribution market, with $1 billion in annual sales, also got into the roll-up action in January and announced that it has acquired Texas paper distributor Bosworth Papers. Gould in turn is 51% owned by the Japan Pulp & Paper company, a global paper distributor with $6 billion in annual revenues.
There also was activity in the other “paper business” – publishing newspapers. An unnamed “independent investor group” acquired Mainstreet Communications from PE fund Brookside Group, including a cluster of local newspaper in the Sierra Nevada area of California. This follows Brookside’s sale of eight community newspaper titles to the San Diego Union Tribune, as previously reported in our November 2013 deal log. In upstate New York, the president and CEO of The Scotsman Press announced that he was acquiring the company which publishes several local community newspapers.
A community newspaper was among the increased number of bankruptcies we found that were filed in January. The Free Lance-Star Publishing Co. of Fredericksburg, Virginia, filed Chapter 11. According to articles published in the company’s signature paper, the company has been struggling to meet the covenants of its debt obligations which were incurred in the ill-timed investment in 2007 to build a state-of-the-art printing facility.
It was also the end of a long and winding road for Ovation Graphics, the mini roll-up in Texas that brought together the highly respected Branch-Smith Printing company and Motheral Printing. The two acquisitions in 2012 ended 100 years and 78 years of family ownership, respectively, of these two commercial printing firms. Whatever remains of Ovation Graphics has been handed over to the Bankruptcy Courts to manage in an involuntary Chapter 7 proceeding, instigated by five companies that got together as petitioning creditors in the case – all five are paper merchants.
| 2014 January - Mergers and Acquisitions in the Printing, Packaging, Paper & Related Industries | |||||||||||||
Deal Party #1 (Surviving Entity) |
Pre-Deal Revenues ($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 |
|||
| Gould Paper Corporation | $1,000 | New York, NY | Bosworth Paper | No Data | Houston, TX | 1/31/14 | No Data | Acquisition | Paper distribution | Link | |||
| Graphic Connections Group | No Data | Chesterfield, MO | Mira Digital Publishing | No Data | Chesterfield, MO | 1/30/14 | No Data | Acquisition | Digital book publishing | Link | |||
| Baldwin Technology | No Data | St. Louis, MO | Web Printing Controls | No Data | Fairfield, IL | 1/30/14 | No Data | Acquisition | Web offset press controls | Link | |||
| Decka Digital | No Data | Harbor Springs, MI | Graphic Printing | No Data | Petoskey, MI | 1/29/14 | No Data | Acquisition | Printing & copying | Link | |||
| Xpedx (Div International Paper) |
No Data | Loveland, OH | Unisource | No Data | Norcross, GA | 1/28/14 | No Data | Merger |
Paper
distribution
(combined $9 to $10 Bil revenue) |
Link | |||
| Konica Minolta | $9,343 | Tokyo, Japan | MGI Digital Graphic Technology | No Data | Paris, France | 1/24/14 | No Data | Minority interest | Digital printing equipment | Link | |||
| William G. Veit | No Data | Syracuse, NY | Scotsman Media Group | No Data | Syracuse, NY | 1/23/14 | No Data | Management Buyout | Community newspapers | Link | |||
| Hood Container | No Data | Waverly, TN | Stronghaven | No Data | Atlanta, GA | 1/22/14 | No Data | Acquisition (Mesirow Financial) |
Packaging & displays | Link | |||
| CCL Industries | $1,650 | Toronto, ON | Sancoa / TubeDec | $82.5 | Lumberton, NJ | 1/21/14 | $71.0 | Acquisition | Labels, tubes & sleeves | Link | |||
| CCL Industries | $1,650 | Toronto, ON | Acrus-CCL | No Data | Santiago, Chile | 1/20/14 | $1.2 | Purchase of Majority Interest | Wine labels | Link | |||
| Citypress | No Data | Waukesha, WI | EGX Group | No Data | West Allis, WI | 1/20/14 | No Data | Merger | Commercial printing | Link | |||
| Electronics for Imaging (EFI) | $727.7 | Foster City, CA | SmartLinc | No Data | Milwaukee, WI | 1/16/14 | No Data | Acquisition | Freight tracking software | Link | |||
| Martin Graphics & Printing | No Data | Champlain, IL | W.M. Putnam | No Data | Bloomington, IL | 1/13/14 | No Data | Asset Acquisition | Office supplies | Link | |||
| 127 Summit Holdings | No Data | Monument, CO | Summit Container Corporation | No Data | Monument, CO | 1/6/14 | No Data |
Acquisition
(St. Charles Capital) |
Corrugated packaging | Link | |||
| InterFlex Group | No Data | Wilkesboro, NC | Star Packaging | No Data | Atlanta, GA | 1/16/14 | No Data | Acquisition | Flexo
packaging (combined $200 Mil revenue) |
Link | |||
| PRP | No Data | Indianapolis, IN | NPP Packaging Graphic Specialists | No Data | Indianapolis, IN | 1/16/14 | No Data | Acquisition | Prepress services for flexo | Link | |||
| Proforma
Media & Print (Franchisee) |
No Data | New Braunfels, TX | Advertising Concepts | No Data | San Antonio, TX | 1/15/14 | No Data | Acquisition | Promotional products | Link | |||
| Independent Investor Group | No Data | San Diego, CA |
Mainstreet
Communications
(Portfolio co. of Brookside Group) |
No Data | San Diego, CA | 1/8/14 | No Data | Acquisition | Community newspapers | Link | |||
| PIP
Printing & Marketing (Franchisee) |
No Data | Sturgeon Bay, WI | Sir
Speedy (Franchisee) |
No Data | Green Bay, WI | 1/8/14 | No Data | Acquisition | Printing & copying | Link | |||
| Schob & Schob | No Data | Kent, WA | NCF Graphic Solutions | No Data | Santa Barbara, CA | 1/2/14 | No Data | Acquisition | Forms & promotional items | Link | |||
| Deluxe Corporation | $1,580 | Shoreview, MN | Destination Rewards | No Data | Boca Raton, FL | 1/7/14 | No Data | Acquisition | Loyalty programs | Link | |||
| Book Manufacturers' Institute | No Data | Palm Coast, FL | Hardcover
Binders International- Library Binding Institute |
No Data | Palm Beach, FL | 1/1/14 | No Data | Merger | Trade associations | Link | |||
| Shawmut | No Data | Danvers, MA | HK Graphics | No Data | Everett, MA | 1/7/14 | No Data | Acquisition | Wide format printing | Link | |||
| Simpson Print | $10.0 | Bloomingdale, ON | Denison Print | No Data | Breslau, ON | 1/6/14 | No Data | Acquisition | Commercial & screen printing | Link | |||
| RockTenn | $9,620 | Norcross, GA | NPG | No Data | Chattanooga, TN | 1/6/14 | No Data | Acquisition | Merchandizing displays | Link | |||
| RR Donnelley | $10,380 | Chicago, IL | Esselte (North American operations) |
No Data | Stamford, CT | 1/6/14 | $96.5 | Acquisition | Paper-based office products | Link | |||
| Verso Paper | $1,400 | Memphis, TN | NewPage Holdings | $3,100 | Miamisburg, OH | 1/6/14 | $1,400 | Acquisition (Evercore) |
Printing papers | Link | |||
| Sun Chemical | $3,500 | Parsippany, NJ | Tintas/Sinclair Group | $100.0 | Medellin, Columbia | 1/3/14 | No Data | Purchase of shares | Printing inks (Latin America) | Link | |||
| 2014 January - Bankruptcy Filings in the Printing, Packaging, Paper & Related Industries | ||||||||||||
Filing Party |
Date Case Filed |
Pre-Petition Revenues ($Mil ) |
Case # |
Filing Party Address |
Circuit |
Region & City |
Judge |
Attorney for Debtor |
Notes |
|||
| Chapter 11 Filings: | ||||||||||||
| The Free Lance-Star Publishing Co. of Fredericksburg, Va. | 1/23/14 | No Data | 14-30315 | Fredericksburg, VA | 4th | Eastern
VA Richmond |
Kevin R. Huennekens | Paula S. Beran | Regional newspaper & radio stations | |||
| David J. Thompson Mailing Corporation | 1/21/14 | No Data | 14-00237 | Bloomsburg, PA | 3rd | Middle
PA Wilkes-Barre |
John J. Thomas | William J. Byrne | Mailing services | |||
| Inc. Graphic Impressions NW | 1/13/14 | No Data | 14-10225 | Seattle, WA | 9th | Western
WA Seattle |
Marc Barreca | Denice E. Moewes | Commercial printing | |||
| Chapter 7 Filings: | ||||||||||||
| Dyna Ink, Ltd. | 1/28/14 | No Data | 14-02590 | Woodbridge, IL | 7th | Northern
IL Chicago |
Donald R. Cassling | John J. Lynch | Commercial printing | |||
| Macadam/Cage Publishing, Inc. | 1/17/14 | No Data | 14-30071 | Fairfax, CA | 9th | Northern
CA San Francisco |
Dennis Montali | Eric A. Nyberg | Book publishing | |||
| Ovation Graphics, LLC | 1/16/14 | No Data | 14-40248 | Fort Worth, TX | 5th | Northern
TX Fort Worth |
D. Michael Lynn | Pro Se | Commercial
printing (Involuntary filing) |
|||
| Geske's Print Shop, LLC | 1/9/14 | No Data | 14-30050 | El Paso, TX | 5th | Western
TX Austin |
H. Christopher Mott | Carlos A. Miranda, III | Commercial printing | |||
| Decker
Enterprises, Inc. (DBA House of Printing) |
1/8/14 | No Data | 14-20007 | Casper, WY | 10th | Wyoming | Peter J. McNiff | Wendy S. Owens | Commercial printing | |||
| Power Print Consulting, LLC | 1/2/14 | No Data | 14-50001 | Fairfield, CT | 2nd | Connecticut Bridgeport |
Alan H.W. Shiff | Chris R. Nelson | Print broker | |||
| 2014 January - 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 |
|||
| Quad Graphics - Printing Facility | Mar-14 | Marengo, IA | Quad Graphics | Sussex, WI | 1/23/14 | Formerly Vertis facility | Link | ||||
| Quad Graphics - Printing Facility | Jun-14 | Pomona, CA | Quad Graphics | Sussex, WI | 1/23/14 | Formerly Vertis facility | Link | ||||
| ASG - Printing plant | 3/31/14 | No Data | Indianapolis, IN | ASG
(formerly AGI-Shorewood) |
Stamford, CT | 1/15/14 | Packaging & labels | Link | |||
