Monday, December 5, 2016

“Just One Word: Plastics” – November 2016 M&A Activity


It’s been almost 50 years since the young Dustin Hoffman, in his role as the confused Benjamin in the 1967 movie The Graduate was offered sage advice about his future career. In the now famous line, a well-meaning elder, in a solemn tone, advised Benjamin, “Just One Word: Plastics.”

That famous phrase seemed superficial to many at the time; the word “plastic” became a synonym for shallowness or anything perceived as phony to the younger generation of the 60’s and 70’s. However, for the printing and packaging industries, that advice still resonates as technological advancements, such as multi-layer films, UV inks, LED curing systems and other developments continuously improve our ability to print on plastics. It turned out that there was, and still is, a future in plastics.

Printing on plastics, specifically manufacturing plastic cards of all sorts, was the target of Multi Packaging Solutions in its recent acquisition of i3 Plastic Cards. Multi Packaging Solutions, a global print and packaging roll-up that has achieved revenues in excess of $1.6 billion since its founding in 2005, is already a significant player in the market for transactional cards including credit card issuers Visa, MasterCard and American Express. The addition of Dallas-based i3 Plastic Cards adds capacity to produce up to another 2 million cards per day, focused on printing gift and loyalty program cards.

Plasticard Locktech International (PLI) secured a $12.4 million investment, structured as mezzanine debt, from Mosaic Capital Partners to fund its acquisition of Production Services Associates (PSA), a plastic card manufacturer based in Romeoville, Illinois. PSA, formerly owned by Spell Capital, specializes in so-called “closed loop” card production; gift cards that can be used at only one brand, such as a Starbucks or Home Depot gift card. Other products produced by PSA include membership cards, loyalty cards (often with a detachable small version of the card for your keychain), coupons and faux credit cards used in marketing solicitations. The acquiring company, PLA, in addition to gift cards, produces addressable plastic keycards used in hotels, resorts, cruise ships, colleges and casinos.

As a bonus for these printing companies, plastic card programs often include additional printed elements, printed on paper or card stock, such as carriers, mailers and cover letters, often personalized. Of critical importance to many of the programs using plastic cards, the cards may have monetary value and require significant security at all stages of production. Card programs often require management of highly sensitive confidential data needed for barcoding, embedded information on magnetic strips and chips, activation, redemption and proper personalization. Maybe that sage advice to that young man, revised if the movie was remade circa 2016, would be, “Just One Word: Data.”

Commercial Printing

OneTouchPoint, the Wisconsin-based roll-up in the commercial printing segment, expanded its presence in the Cincinnati market with the acquisition of PrintManagment. The acquired company brings additional digital printing and data management capabilities into the OneTouchPoint marketing services platform. The company now boasts additional locations in Texas, Colorado and Arizona in addition to its original core Midwest locations.

On the other side of Ohio, in the northeast corner of the state just south of Cleveland, Traxium continued its roll-up of smaller local companies in commercial printing and marketing services with the acquisition of McKinnon Printing. McKinnon will be tucked into Traxium’s Printing Concepts division in Stow, Ohio. This is the second acquisition this year for Traxium (See The Target Report – July 2016).

In Greenville, South Carolina, the local Minuteman Press franchise acquired commercial printer Fox Creek Printing and moved into the acquired company’s 5,500 square foot facility, signaling that the company plans to compete for larger commercial print orders, as well as wide format products.

Packaging

November was another busy month for M&A activity in the packaging segment. In addition to the aforementioned acquisition of the plastic card printer, Multi Packaging Solutions acquired AJS Labels in the UK, adding to its global capacity to print pressure sensitive labels for packaging applications.

Novolex acquired the packaging converting operations of Burrows Paper. Burrows was divided and sold in two separate transactions during November, ending almost 100 years of family ownership (the paper operations were sold to Twin Rivers Paper). Novolex was created by private equity firm Wind Point Partners with the combination of Hilex Poly, Duro Bag Manufacturing and Packaging Dynamics in 2014 (See The Target Report – November 2014), and added to with the acquisition of Wisconsin Film & Bag in 2015.

Fort Dearborn, producer of prime labels of all sorts; cut & stack, pressure sensitive, roll-fed, and shrink sleeve labels, purchased SleeveCo which prints stretch sleeve labels and supplies associated application equipment. The newly acquired facility in Dawsonville, Georgia brings the total to fifteen production locations across the US and Canada. Fort Dearborn itself was acquired earlier this year by Advent International (See The Target Report – “Private Equity Loves Labels"), previously having acquired both AC Label and the label business unit of the FetterGroup in 2013.

Sonoco, the nearly $5 billion conglomerate, maybe best known to printers for its ubiquitous paper tubes and cores, expanded its diverse capabilities in packaging with the acquisition of Plastic Packaging, manufacturer of flexible packaging located in Hickory, North Carolina. The acquired company produces a wide variety of packaging, including stand-up pouches, bags, and sleeves, with a focus on serving the pet products, food and other consumer product markets.

2016 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
Fort Dearborn
(Port co. Advent International)
No Data Elk Grove, IL SleeveCo No Data Dawsonville, GA 11/29/16 No Data Acquisition Shrink sleeve labels Link
Supremex $158.5 LaSalle, QC Durabox $8.0 Lachine, QC 11/28/16 No Data Acquisition Corrugated boxes Link
Oval Partners No Data San Francisco, CA ProCopy Office Solutions No Data Tempe, AZ 11/16/16 No Data Acquisition Managed print services Link
GateHouse Media
(Div. New Media Investment)
$1,200 Pittsford, NY Kansas Newspapers
(Harris Enterprises)
No Data Hutchinson, KS 11/15/16 No Data Acquisition
(Dirks, Van Essen)
Community newspapers Link
Amcor $7,025 Victoria, Australia Hebei Qite Packing No Data Hebei, China 11/11/16 $28.0 Acquisition Flexible packaging Link
Twin Rivers Paper
(Port co. Blue Wolf Capital)
No Data Madawaska, ME Paper operations
(Div. Burrows Paper)
No Data Little Falls, NY 11/11/16 No Data Acquisition Paper mills Link
Novolex
(Port. Co Wind Point Partners)
No Data Hartsville, SC Packaging operations
(Div. Burrows Paper)
No Data Little Falls, NY 11/11/16 No Data Acquisition Packaging converting Link
Canadian Kraft Paper Industries No Data Greenwich, CT Kraft paper mill
(Sub. Tolko)
No Data The Pas, MB
(Vernon, BC)
11/10/16 No Data Acquisition Paper mill Link
Multi Packaging Solutions
(Port co. Madison Dearborn)
$1,617 New York, NY AJS Labels No Data Littlehampton, UK 11/8/16 No Data Acquisition PS labels/packaging Link
Multi Packaging Solutions
(Port co. Madison Dearborn)
$1,617 New York, NY i3 Plastic Cards No Data Dallas, TX 11/8/16 No Data Acquisition Plastic card printing Link
OneTouchPoint No Data Hartland, WI PrintManagement No Data Cincinnati, OH 11/7/16 No Data Acquisition Commercial printing Link
Paddock Publications No Data Arlington Heights, IL Gold Nugget Publications No Data Virden, IL 11/7/16 No Data Acquisition Community newspapers Link
Alliance Franchise Brands No Data Plymouth, MI KKP Canada No Data Richmond Hill, ON 11/4/16 No Data Acquisition Printing & copying franchisor Link
Printing Concepts
(Div. Traxium)
No Data Stow, OH McKinnon Printing No Data Akron, OH 11/3/16 No Data Acquisition Commercial printing Link
Plasticard Locktech International No Data Asheville, NC  Production Services Associates
(Port co. Spell Capital)
No Data Romeoville, IL  11/2/16 No Data Acquisition
(Stout Risius Ross)
Plastic card manufacturing Link
Minuteman Press No Data Greenville, SC Fox Creek Printing No Data Greenville, SC 11/2/16 No Data Acquisition Commercial printing Link
Sonoco $4,910 Hartsville, SC Plastic Packaging $42.0 Hickory, NC 11/2/16 No Data Acquisition Flexible packaging Link


2016 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:
No Chapter 11 Filings Found this Month --- --- --- --- --- --- --- --- ---
GKM Corporation 11/22/16 No Data 16-27746  Colfax, CA 9th Eastern CA
Sacramento
Christopher M. Klein Anthony Asebedo  Commercial printing
West Coast Litho, Inc. 11/18/16 No Data 16-25252 Gardena, CA 9th Central CA
Los Angeles
Sheri Bluebond Batkhand Zoljargal  Commercial printing


2016 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
Payette & Simms 12/8/16 No Data Boucherville, QC None N/A Nov-16 Commercial printing (web) Link
Printers Edge 12/6/16 No Data Orlando, FL None N/A Nov-16 Bindery and print finishing services Link

Monday, November 7, 2016

Moving Pieces Around on the PE Chessboard – October 2016 M&A Activity


Where does a private equity company go to sell a printing or packaging company when the time comes to exit the investment and return funds to its investors? The large public firms executing national roll-up strategies (CGX, RRD, Cenveo, etc.) have left the game, and companies in the printing, packaging and related industries are increasingly being passed from one fund to another in what are known as “secondary buyouts.” 

A secondary buyout does not necessarily portend a negative outcome, as the acquiring fund may have a different strategy or unique skill set that builds additional value in the portfolio company before the eventual sale to a strategic buyer or yet another private equity firm. The first private equity fund/owner may have reached the limit of its buying capacity, exhausted its available equity or simply run out of time to increase the value of the acquired company through internal improvements or further acquisitions. The acquiring fund may be larger, more able to finance additional bolt-ons, or simply starts the timeclock over again. Alternatively, the second fund/owner may not have predetermined exit schedules; rather the fund may be patient and manage the company for cash dividends and long term value creation. 

Wellspring Capital created flexible packaging powerhouse ProAmpac with its acquisition of Ampac and Prolamina in 2015 (see The Target Report – August 2015). Wellspring quickly added a bolt-on to its new platform company with the acquisition of Coating Excellence International last December. The Wellspring team was apparently on track to complete additional acquisitions when the Pritzker brothers, both billionaires, came knocking. Scions of the Hyatt Hotels fortune, the brothers had lost out to Wellspring in the original bidding for Ampac which subsequently led to the formation of ProAmpac. In September, the Pritzkers re-entered the game and through their own fund, Pritzker Group Private Capital, have acquired the now much larger ProAmpac. In what must have been two very busy days, the brothers made their next move just one day later, acquiring the Vitex Packaging Group, a flexible packaging company, from another fund, Kirkland Capital. 

The Pritzker fund is not a traditional fund that raises capital from others; the Pritzkers invest their own capital, hence the fund is free from the outside pressure exerted by investors that force timed exits from portfolio companies. While we expect that more acquisitions by ProAmpac, supported by its new owners, will be forthcoming, it appears that ProAmpac itself is likely off the market for the foreseeable future. 

Capital Partners, a private equity fund based in Norwalk, Connecticut, acquired label, flexible packaging and folding carton manufacturer Outlook Group from Milestone Partners, a private equity fund in Radnor, Pennsylvania. Milestone acquired Outlook Group ten years ago, a long time for an investment in the private equity world where typical holding periods are usually five years, seven years on the outside. Regardless of the reason for the long hold, the time had finally come for Milestone to exit and Capital Partners provided the secondary buyout, which was completed through its existing portfolio company, M&Q Packaging, a Pennsylvania-based producer of specialty high-temperature resistant plastic packaging solutions. 

Here is a summary of secondary buyouts in the printing, packaging and related industries during 2015 
and the first ten months of 2016 (see corresponding Target Reports for more info and links to sources):

Secondary Buyouts in Printing Segments (2015/2016)
Buyer
Portfolio Co / PE Sponsor
Acquired Company
Portfolio Co / PE Sponsor
Month Segment
ProAmpac
(Port co. Pritzker Group)
Vitex Packaging Group
(Port co. Kirkland Capital)
Oct-16 Flexible packaging
Pritzker Group Private Capital ProAmpac
(Port co. Wellspring Capital)
Oct-16 Flexible packaging
M&Q Packaging
(Port co. Capital Partners)
Outlook Group
(Port co. Milestone Partners)
Oct-16 Labels & folding cartons
Arbor Investments Dunn Paper
(Port co. Wingate Partners)
Aug-16 Specialty paper mills
Resilience Capital Partners DG3
(Port co. Arsenal Capital)
Aug-16 Printing & document mngt.
RFE Investment Partners Stagnito Business Information
(Port co. Topspin Partners)
Feb-16 Business publishing
Novolex
(Port. Co Wind Point Partners)
Wisconsin Film & Bag
(Port. Co. Argosy Partners, et al.)
Oct-15 Plastic wraps & bags
Olympus Partners Liqui-Box
(Port. co. Sterling Group)
Sep-15 Liquid packaging systems
Argosy Investment Partners SirsiDynix
(Port co. ICV Partners)
Sep-15 Library software
Wendell Group Constantia Flexibles
(Port co. One Equity Partners)
Jan-15 Flexible packaging

Commercial Printing – Print Management

Transactional activity picked up a bit in the commercial printing segment in October, however unfortunately several announcements were of closures and one bankruptcy filing. Despite the increase, we see no reason to ring alarms bells. When compared to the activity we reported in the first Target Reports, back in 2011 and 2012, these negative indicators are still far fewer and may just be indicative of marginal operations that finally came to their natural end (see the online deal logs below for details).

On a more positive note, Target Print & Mail in Tallahassee, Florida, continued its evolution from a college-town copy shop to full-service commercial print shop with the acquisition of Modern Mailers, also of Tallahassee. Print-Tech, a commercial printer in Ann Arbor, Michigan, tucked-in the business and selected employees from First Impression Printing, also of Ann Arbor. The sellers are retiring.

Maestro Media Print Solutions, a specialized technology-driven print management firm in Bloomfield Hills, Michigan has merged with IBS Direct, a direct response and marketing services company with powerful printing capabilities. Based in King of Prussia, Pennsylvania, IBS Direct has announced that both firms will continue to operate in their current locations, expanding both companies’ geographic and operational footprints. *

Notably, the IBS Direct merger with Maestro was the second transaction in as many months in which a broadly-defined marketing solutions provider acquired a print management firm. In August, Hibbert Group announced the acquisition of the California-based RedShark Group. In each case, the companies added strong customer relationships, support technology and geographic diversity via a transaction with an outsourced procurement service company. **

* Graphic Arts Advisors, publisher of The Target Report, served as advisors to Maestro Media Print Solutions in this transaction.

** Graphic Arts Advisors, publisher of The Target Report, served as advisors to The RedShark Group in this transaction.


2016 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
IBS Direct No Data King of Prussia, PA Maestro Media Print Solutions No Data Bloomfield Hills, MI 10/27/16 No Data
Acquisition
(Graphic Arts Advisors)
Print management Link
Sun Chemical
(Div. Dainippon Ink & Chemicals)
$7,500 Parsippany, NJ Gwent Electronic Materials No Data Pontypool, UK 10/25/16 No Data Acquisition Conductive inks Link
Target Print & Mail No Data Tallahassee, FL Modern Mailers No Data Tallahassee, FL 10/21/16 No Data Acquisition Mailing services Link
ProAmpac
(Port co. Pritzker Group)
No Data Cincinnati, OH Vitex Packaging Group
(Port co. Kirkland Capital)
No Data Suffolk, VA 10/18/16 No Data Acquisition Flexible packaging Link
Pritzker Group Private Capital No Data Chicago, IL ProAmpac
(Port co. Wellspring Capital)
No Data Cincinnati, OH 10/17/16 No Data Acquisition
(William Blair)
Flexible packaging Link
M&Q Packaging
(Port co. Capital Partners)
No Data Schuylkill Haven, PA Outlook Group
(Port co. Milestone Partners)
No Data Neenah, WI 10/17/16 No Data Acquisition Labels & folding cartons Link
Transcontinental $1,495 Montreal, QC Flexstar Packaging $26.9 Richmond, BC 10/17/16 No Data Acquisition Flexible packaging Link
Print-Tech No Data Ann Arbor, MI First Impression Printing No Data Ann Arbor, MI 10/14/16 No Data Acquisition Commercial printing Link
Packaging Corporation of America $5,690 Lake Forest, IL Columbus Container No Data Columbus, IN 10/11/16 $100.0 Acquisition Corrugated packaging Link
Inovar Packaging Group
(Port co. AEA Investors)
No Data Arlington, TX LabelPrint America No Data Newburyport, MA 10/10/16 No Data Acquisition
(Ideadvisors)
Label printing Link
One Rock Capital Partners No Data New York, NY
North Pacific Paper Company
(JV Nippon Paper & Weyerhaeuser)
No Data Longview, WA 10/5/16 No Data Acquisition Newsprint & publication papers Link
Dimension Design No Data Glenview, IL Media Works No Data Jacksonville, FL 10/3/16 No Data Acquisition Trade show exhibits Link


2016 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:
Lucas Printing Company 10/21/16 No Data 16-51392 Stamford, CT 2nd Connecticut
New Haven
Julie A. Manning Julie A. Manning Commercial printing
No Chapter 7 Filings Found this Month --- --- --- --- --- --- --- --- ---


2016 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
Harte Hanks - Printing Plant Dec-16 No Data Halethorpe, MD Harte Hanks San Antonio, TX Oct-16 Direct mail printing & mailing Link
Metropolitan NYC Printing Company 12/1/16 No Data Long Island City, NY None N/A Oct-16 Commercial printing Link
Apollo Press 11/30/16 No Data Newport News, VA None N/A Oct-16 Commercial printing Link
Yelding 11/10/16 No Data Naugatuck, CT None N/A Oct-16 Commercial printing Link
Independent Graphic Services 10/18/16 No Data Elgin, Illinois None N/A Oct-16 Printing machinery & repairs Link