Thursday, December 7, 2017

Flexible Packaging is Hot – November 2017 M&A Activity

In what’s arguably the hottest segment in the printing related industries, flexible packaging, TC Transcontinental has announced the acquisition of Flexipak, a Montreal-based flexographic printer of bags and stand-up pouches.

TC Transcontinental (TC) is a $1.6 billion (USD) printing and publishing company headquartered in Montreal with significant positions not only in printing but also in publishing newspapers and magazines, primarily serving Canadian audiences. With the obvious headwinds that these segments are facing, company management made the strategic decision to begin building a portfolio of packaging assets, utilizing their printing expertise, specifically web-based roll-fed technologies in which the company excelled in their high-volume operations. At the onset of this strategy in March 2014, when TC acquired its first flexible packaging company, François Olivier, President and CEO of TC, stated that the deal was the first indication of the company’s new strategic plan to grow through diversification. He added that flexible packaging was identified as a natural fit since the production process was in many ways similar to their current operations that ran roll-fed substrates and the market offered opportunities for growth. (see The Target Report – March 2014). Viewed from the perspective of its M&A activity, the company has remained laser-focused on implementing this strategy.

The announcement of its latest acquisition in November marks the company’s fifth deal in the flexible packaging segment. TC has acquired companies that might appear small relative to the total TC enterprise. The purchased companies have ranged in size from $27 million to $72 million (USD) in annual revenues, for a total in excess of $220 million revenues (not including this recent acquisition, for which revenues have not been disclosed). Lest there be any lack of clarity as to the company’s strategic direction, Isabell Marcoux, Chair of the Board of TC, reiterated in last year’s annual report that TC’s vision includes “transforming the organization to be a North American leader in flexible packaging.”


(Click on chart to view enlarged)

In our opinion, this is a great example of a planned, disciplined, articulate and well-executed strategy. The plan utilizes the company’s financial strength gained from its traditional foundation, in this case printing newspapers and magazines, to build out an entirely new expertise in a much more desirable (and likely sustainable over the long term) segment of the printing industry!

Packaging

TricorBraun, a large manufacturer of rigid packaging (glass and plastic containers), with over 40 global locations, acquired Taipak, a flexible packaging printing company in Richmond, British Columbia. With this acquisition, TricorBraun, owned by PE firm AEA Investors, establishes its first foothold in the flexible packaging industry.

Graphic Packaging, the multi-billion dollar publicly-traded company that just last month took on the $1.6 billion consumer packaging division of International Paper Company, has announced another, albeit much smaller, acquisition in its sweet spot, the folding carton segment. The company is acquiring Seydaco Packaging, a folding carton printing company in Mississauga, Ontario with $40 million in revenues. EBITDA was reported being in the low double digits for the last twelve months, at a price reported that will be slightly less than 6 times EBITDA on a post-synergy basis.

Nosco is back on the deal-making path only a month after its last acquisition (see The Target Report – October 2017), this time acquiring the Knight Packaging Group located in Chicago. The acquired company is a departure from Nosco’s pharma-focused offerings, as Knight services the food industry, consumer products, as well as OTC products, offering packaging technologies such as blister packs and gabletop cartons, in additional to traditional folding cartons.

In the label segment, Western Shield Label acquired DAC Labels & Graphic Specialties, extending from its California base to the acquired location in Dallas, Texas. USA/Docufinish, a label printer in Yorkville, Illinois, was acquired in a management buyout.

Commercial Printing and Diversified Services

Kingery Printing Company, a commercial web and sheetfed printing company with operations in in Effingham and Henry, both in Illinois, acquired United Graphics* in Mattoon, Illinois. In addition to providing commercial printing services, United Graphics brings expertise in book printing and binding to the newly combined companies.

Anstadt Communications, based in York, Pennsylvania, reached all the way to Milwaukee, Wisconsin to acquire Central File Marketing, a provider of direct mail and marketing services specializing in the rent-to-own industry.

Thomas Printing, headquartered in Kalispell, Montana, acquired commercial printer Artcraft Printers in Billings, also in Montana. Commenting on the acquisition and in a timeless testament to the grit it takes to succeed in today’s printing industry, the senior owner of Thomas Printing stated for the local paper, “The giant oak is just a little nut that held its ground,” Frank said. “It’s been a long road. I’ve been fighting this goddamn game for 80 years, so pretty soon here we’re going to make it work.”


* Graphic Arts Advisors, publisher of The Target Report, served as advisors to Kingery Printing Graphics in this transaction.


2017 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
Release
Regent No Data Beverly Hills, CA Sunset Magazine
(Prop. Time Inc.)
No Data New York, NY 11/30/17 No Data Acquisition Magazine publishing Link
USA/Docufinish Mngt. No Data Yorkville, IL USA/Docufinish No Data Yorkville, IL 11/29/17 No Data Mngt. Buyout Label printing Link
LSC Communications $3,520 Chicago, IL The Clark Group
(Port co. The Gores Group)
No Data Hamilton, NJ 11/29/17 No Data Acquisition Print logistics Link
Western Shield Label No Data Rancho Dominguez, CA DAC Labels & Graphic Specialties No Data Dallas, TX 11/28/17 No Data Acquisition Label printing Link
Kingery Printing Company No Data Effingham, IL United Graphics No Data Mattoon, IL 11/28/17 No Data Acquisition Commercial printing Link
Meredith $1,710 Des Moines, IA Time $2,880 New York, NY 11/26/17 $2,800 Acquisition Magazine publishing Link
Thomas Printing No Data Kalispell, MT Artcraft Printers No Data Billings, MT 11/21/17 No Data Acquisition Commercial printing Link
TricorBraun
(Port co. AEA Investors)
No Data St. Louis, MO Taipak No Data Richmond, BC 11/16/17 No Data Acquisition Flexible packaging Link
Anstadt Communications No Data York, PA Central File Marketing No Data Milwaukee, WI 11/14/17 No Data Acquisition Direct mail & marketing Link
Hot Frog Print Media No Data Mechanicsburg, PA Printed Image No Data Carlisle, PA 11/10/17 No Data Acquisition Commercial printing Link
LSC Communications $3,520 Chicago, IL Quality Park
(Div. Cenveo)
No Data Minneapolis, MN 11/9/17 No Data Acquisition Envelope manufacturing Link
Graphic Packaging $4,350 Atlanta, GA Seydaco Packaging $40.0 Mississauga, ON 11/9/17 No Data Acquisition Folding cartons Link
Mullen Family No Data Buffalo, WY The Nugget No Data Sisters, OR 11/8/17 No Data Acquisition Community newspaper Link
Martin Yale Industries
(Port co. LV2 Equity Partners)
No Data Wabash, IN Dry-Lam No Data Shawnee, KS 11/8/17 No Data Acquisition Laminating equip. & films Link
Blackford Capital No Data Grand Rapids, MI Kingsport Book No Data Church Hill, TN 11/6/17 No Data Acquisition Book binding services Link
Sentinel Capital Partners No Data New York, NY Nekoosa
(Port co. Wingate Partners)
No Data Nekoosa, WI 11/2/17 No Data Acquisition Specialty papers Link
Sun Chemical
(Div. Dainippon Ink & Chemicals)
$7,500 Parsippany, NJ Transitions Digital Graphics No Data Santa Barbara, CA 11/1/17 No Data Acquisition Specialty inks Link
HH Global $358.6 Sutton, UK PostNL Print Management $23.5 The Hague,
Netherlands
11/1/17 No Data Acquisition Print management Link
Nosco
(Sub. Holden Industries)
No Data Waukegan, IL Knight Packaging Group No Data Chicago, IL 11/1/17 No Data Acquisition Folding cartons Link
Allegra Bozeman
(Franchisee)
No Data Bozeman, MT Bozeman Printing No Data Bozeman, MT 11/1/17 No Data Acquisition Printing & copying Link
Transcontinental $1,612 Montreal, QC Flexipak No Data Montreal, QC 11/1/17 No Data Acquisition Flexible packaging Link


2017 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:
Jones Printing LLC 11/10/17 No Data 17-15187 Chattanooga, TN 6th Eastern TN
Chattanooga
Shelley D. Rucker David J. Fulton Commercial printing
Chapter 7 Filings:
No Rush Charge Reprographics, Inc. 11/28/17 No Data 17-14649 Irvine, CA 9th Central CA Erithe A. Smith Renee Nasiri  Reprographic services


2017 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
NMD&D 12/14/17 No Data Irving, TX None N/A Nov-17 Transactional printing Link
Riegel Communications Group 12/13/17 No Data Ewing, NJ None N/A Nov-17 Commercial printing Link
Dutton Press 12/12/17 No Data Hialeah, FL None N/A Nov-17 Commercial printing Link

Tuesday, November 7, 2017

Transactional Print: Fertile Ground for Consolidation – October 2017 M&A Activity


As the millennial generation increasingly opts for “e-presentment” of monthly invoices and statements, companies that print these documents may find the ground underneath their business shifting as the transactional printing segment rapidly develops in today’s multi-channel environment. Recent acquisitions are indicative that the conditions are fertile for roll-up and consolidation in the transactional / transpromo segment of the printing industry.

OSG Billing Services, headquartered in New Jersey and with ten locations nationally, announced the acquisition of Illinois-based Microdynamics, with three Midwest locations. The two companies list nearly identical service solutions on their respective websites, offering transactional / transpromo printing, mailing of statements and invoices, and electronic bill presentment. While each company is not an exact mirror of the other, the “e-services” noted on their websites include archival services and delivery via email. OSG also offers mobile apps, clearly aiming to nurture and grow its e-presentment capabilities to its current print-centric customers.

Acquired just four months ago by New York-based private equity firm Aquiline Capital Partners, OSG is now established as a new platform company poised for bolt-on additional revenue and production capacity in both print and electronic transactional document processing. The sale to OSG was a secondary buyout for the acquired company, Microdynamics, which was the target of an initial buyout by Wafra Partners in 2006. Not surprisingly, Wafra was ready to move on, having held Microdynamics in its portfolio for eleven years through the entire economic cycle from the peak before the Great Recession to the current bull market, far longer than the median five-year hold period recently reported for PE exits this year.

Newly planted into Aquiline Capital, OSG and its recently grafted-on offshoot Microdynamics are poised for additional growth in a segment likely to experience more consolidation. Companies that can only process the print portion of billing presentment in this multi-channel environment may be well advised to seek a partner while the sun is still shining on targets in the transactional / transpromo printing business.

Packaging

The Snow Phipps Group, a private equity firm based in New York acquired Brook & Whittle, a Connecticut company that manufactures prime labels, in a secondary buyout transaction (for a discussion about secondary PE buyouts, see Moving Pieces Around on the PE Chessboard, The Target Report – October 2016). Brook & Whittle was previously owned by RFE Partners and Charter Oak, two private equity firms that had jointly acquired Brook & Whittle in 2009. Under that initial PE ownership, Brook & Whittle expanded its production capacity to produce high volume pressure sensitive labels, and in 2011 completed the strategic add-on acquisition of the Packstar Group in Buffalo, New York which significantly expanded the company’s shrink sleeve label business.

Also in the label segment, industry roll-up giant CCL Label acquired the balance of the 37.5% minority shares that it did not already own in its Chilean subsidiary, Acrus CLL. Our calculations of the purchase price paid, relative to the percentage of shares outstanding, indicate that CCL paid approximately 5.8x times last year’s EBITDA, very consistent with the range of 4.1x to 6.0x in which CLL has stayed within in all its reported deals of smaller label companies (see Sticky Discipline for the Label Business, The Target Report – May 2016).

In the segment where we hear that purchase multiples are often approaching or in the double-digit range, flexible packaging printer and converting company Seville Flexpack, located in Oak Creek, Wisconsin has been acquired by the German flexible packaging manufacturer Südpack Verpackungen. The buyer, with plants throughout Europe, announced that it plans to acquire more US-based flexible packaging companies now that it has a foothold in the US market.

Nosco, a division of ESOP-owned Holden Industries, acquired Gooding Company in a move that broadens the types of printed products it can provide to its existing customer base. The purchased company, based in western New York State, produces mini-folded inserts and outserts for the pharmaceutical, nutraceutical, medical device, health, and beauty markets, the same markets into which Nosco provides offset and digitally-printed labels and cartons.

Commercial Printing and Diversified Services

Acquisitions in the commercial printing segment, by far the most active for deals 
over the past twelve months, continued unabated in October. Here is a graphic representation of the transactions listed in the past twelve months on The Target Report deal logs:



Vomela, with in excess of $237 million annual revenue and much more known for its prowess in the point-of-purchase and fleet marking segments, once again added to its portfolio of commercial printing companies with the acquisition of Tepel Brothers Printing in Troy, Michigan. The acquired company will retain its name and operate within Vomela’s C2 Imaging unit which this past March also added Elk Grove Graphics to the roster of commercial printing companies joining the Vomela Companies (see The Target Report – March 2016).

Two smaller commercial printing companies in Sanford, Maine have announced that they will merge operations, with Edison Press acquiring Lincoln Press. Consolidation and shrinkage within the commercial segment was further evidenced by the involuntary Chapter 7 filing against Integrity Graphics in Windsor, Connecticut. As we noted in our July 2017 log of non-bankruptcy closures, Integrity had closed its operations and an auction of all the equipment was scheduled for September.



2017 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
Release
Valassis
(Div. Harland Clarke Holdings)
No Data Livonia, MI Sacandaga Direct Mail No Data Mayfield, NY 10/30/17 No Data Acquisition Regional magazines Link
Data Communications Mngt. $277.2 Brampton, ON Bolder Graphics $7.0 Calgary, AB 10/30/17 $4.9 Acquisition Wide format printing Link
GateHouse Media
(Div. New Media Investment)
$1,270 Pittsford, NY Edward A. Sherman Publishing No Data Newport, RI  10/26/17 No Data Acquisition Community newspapers Link
DBC Communications No Data Saint-hyacinthe, QC Les 2 Rives
(Prop. Transcontinental)
No Data
($2,040)
Montreal, QC 10/25/17 No Data Acquisition Weekly newspaper Link
Graphic Packaging $4,330 Atlanta, GA
Consumer packaging business
(Div. International Paper Company)
$1,600
($23,590)
Memphis, TN 10/24/17 $1,800 Joint Venture Paperboard mills & converting Link
Nosco
(Sub. Holden Industries)
No Data Waukegan, IL Gooding company No Data Lockport, NY 10/23/17 No Data Acquisition
(New Direction)
Pharma inserts & outserts Link
Hearst Newspapers
(Div. Hearst)
$10,800 New York, NY Rodale No Data Emmaus, PA 10/18/17 No Data Acquisition
(Allen & Co.)
Magazine & book publishing Link
OSG Billing Services
(Port co. Aquiline Capital)
No Data Ridgefield Park, NJ Microdynamics
(Port co. Wafra Partners)
No Data Naperville, IL 10/18/17 No Data Acquisition Transactional printing Link
Snow Phipps Group No Data New York, NY Brook & Whittle
(Port co. RFE & Charter Oak)
No Data North Branford, CT 10/18/17 No Data Acquisition Prime label printing Link
Founders Advantage Capital No Data Calgary, AB Astley Gilbert No Data Toronto, ON 10/16/17 $24.7 Purchase of 50% AEC printing services Link
Edison Press No Data Sanford, ME Lincoln Press No Data Sanford, ME 10/16/17 No Data Acquisition Commercial printing Link
Siegwerk No Data Siegburg, Germany Van Son Liquids No Data Hilversum,
Netherlands
10/16/17 No Data Acquisition Flexo & gravure inks Link
Neenah Paper $944.2 Alpharetta, GA Coldenhove Papier $45.0 Eerbeck,
Netherlands
10/11/17 $45.0 Acquisition Specialty papers Link
Industrial Assets Corp. No Data Studio City, CA Appleton Coated $350.0 Combined Locks, WI 10/10/17 $21.5 Receivership sale Coated paper mill Link
Vomela $237.0 St. Paul, MN Tepel Brothers Printing No Data Troy, MI 10/9/17 No Data Acquisition Commercial printing Link
Worth Higgins & Associates $27.0 Richmond, VA Sign Unlimited $2.0 Richmond, VA 10/6/17 No Data Acquisition Signage Link
DemandBridge No Data Norcross, GA e-Quantum No Data Sparks, NV 10/5/17 No Data Acquisition
(Corp Dev Assoc)
Print distributor software Link
Adams Publishing Group No Data Minneapolis, MN Pioneer News Group
(Media division)
No Data Seattle, WA 10/5/17 No Data Acquisition Community newspapers Link
MBE Worldwide $641.0 Milan, Italy AlphaGraphics
(Master franchisor)
$299.0 Salt Lake City, UT 10/4/17 No Data Acquisition Print franchise system Link
Graphic Packaging $4,330 Atlanta, GA Norgraft Packaging $40.0 Cantabria, Spain 10/4/17 No Data Acquisition Folding cartons Link
CCL Industries $4,460 Toronto, ON Acrus CCL $18.1 Santiago, Chile 10/3/17 $6.3 Buyout of Minority Beverage labels Link
Fortusis No Data West Jordan, UT ICED No Data Cypress, TX 10/3/17 No Data Acquisition Print franchise system Link
Electronics for Imaging (EFI) $988.0 Foster City, CA Escada Systems No Data Hull, UK 10/2/17 No Data Acquisition Corrugated process control Link
CJK Group No Data Brainerd, MN Webcrafters No Data Madison, WI 10/2/17 No Data Acquisition Book printing Link
Südpack Packaging Group No Data Ochsenhausen,
Germany
Seville Flexpack No Data Oak Creek, WI 10/1/17 No Data Acquisition
(TKO Miller)
Flexible packaging Link


2017 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:
Appvion, Inc. 10/1/17 No Data 17-12082 Appleton, WI 3rd Delaware
Wilmington
Kevin J. Carey Stuart M. Brown Specialty papers
Journal-Chronicle Company
(aka J-C Press)
10/23/17 No Data 17-33322 Owatonna, MN 8th Minnesota
Minneapolis
William J. Fisher Thomas Flynn Commercial printing
Chapter 7 Filings:
Integrity Graphics, Inc. 10/3/17 No Data 17-21513 Windsor, CT 2nd Connecticut
Hartford
James T. Tancredi Jon P. Newton Commercial printing
West Linn Paper Company 10/26/17 No Data 17-33992 West Linn, OR 9th Oregon Trish M. Brown Pro Se Paper mill


2017 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
West Linn Paper - paper mill Oct-17 No Data West Linn, OR None N/A 10/17/17 Coated free-sheet & specialty papers
(Originally Willamette Falls Paper & Pulp)
Link
Quad/Graphics - Printing facility Dec-17 No Data Waseca, MN Quad Graphics Sussex, WI  10/25/17 Consolidating print operations Link
Riverside Group 12/7/17 No Data Rochester, NY None N/A Oct-17 Trade binding services Link
Becker Printing Company 11/14/17 No Data Beaumont, TX None N/A Oct-17 Commercial printing Link
General Die & Die Cutting 11/15/17 No Data Roosevelt, NY None N/A Oct-17 Trade finishing services Link
Pro Printing and Graphics 11/8/17 No Data North Platte, NE None N/A Oct-17 Printing & copying Link
DBS Industries 11/16/17 No Data Haverhill, MA None N/A Oct-17 Business forms printing Link