The process of transitioning from print to digital documents and services is not a new development for Deluxe. In its latest annual report, Deluxe reported that 30 percent of its $1.8 billion annual revenue was in non-print “marketing and other services.” The portion of non-print revenues was even higher, 37 percent, within its financial services segment. Just last month, Deluxe announced another acquisition, purchasing First Manhattan Consulting Group (FMCG Direct). FMCG is a direct mail and marketing company that serves financial institutions with marketing analytics, proprietary research, and target market segmentation models that drive higher response rates. Creative campaign design and production management round out the service offerings. There is nary a mention of print on the acquired company’s website, even though FMCG’s final deliverable product is direct mail. Notable for our readers interested in transaction values is the purchase price of $200 million which was reported to be 2.35 to 2.5 times projected 2017 revenues of $80 to $85 million. In another acquisition of a data analytics company that improves marketing programs, and illustrative of its clear strategic acquisition plan, Deluxe acquired Datamyx in 2015.
Meanwhile, the traditional check printing business continues to decline both in revenues and profits, with sales down 7.8% year-over-year for the fourth quarter of 2016. Despite the steady decline in its traditional business, overall company revenues have increased due to the company’s acquisitions that are strategically focused on marketing solutions and other related services.
Deluxe began printing paper checks in 1915. In 2017, the company still prints checks, but also provides sophisticated marketing services, financial processing services, as well as hosting more than 950,000 websites for small businesses. That’s transformation!
Consumer Web-to-Print
Despite a crowded market in the online photo book printing segment, Utah-based Chatbooks raised $11.5 million in a Series B funding led by Aries Capital Partners, bringing total angel and VC investment in the startup to over $20 million. Founded by a photo-book-worthy mom-and-pop couple with seven children, the company approached the photo book market with two propositions, keep it simple and make it accessible via mobile.
The online photo book printing industry in the US is now estimated to be in excess of $2 billion annually and has been growing at an 11.7% rate with over 850 companies competing one way or another in the segment. In a few short years, the business has become highly competitive; a simple online search reveals a plethora of companies offering deep discounts from list pricing. The largest player in the segment, publicly traded Shutterfly, finished 2016 with over $1 billion in revenue. So how did the Johnny-come-lately startup Chatbooks convince investors to fund another round in a printing service? It may have something to do with the company’s brilliant use of online videos featuring a harried mother explaining how simple it is to order their printed photo books. The online videos are a viral phenomenon, driving viewers via social media to their website and ultimately enough folks load the mobile app and begin ordering printed photo books.
Commercial Printing – Diversified Services
Orora, the Australian company that has entered the retail display segment in a big way over the past year continued its acquisition spree in February, announcing the simultaneous purchase of the Garvey Group based in Niles, Illinois and Graphic Tech in Fullerton, California. While not announcing the price paid separately for each company, Orora did reveal that the combined price was $54 million which represents a multiple of 5.8 times trailing EBITDA. In what appears to be an Orora transaction signature bonus payment, the sellers were reimbursed an additional $5 million for recent capital investments, bringing the effective multiple paid to 6.3 times EBITDA.
Orora has ignited interest and established a valuation benchmark in the retail display and point-of-purchase segment, having only last month acquired Register Print Group in New Jersey at 6.2 times EBITDA including reimbursed capex (see The Target Report – January 2017). These recent acquisitions are in addition to the beachhead Orora established in March 2016, entering the US display printing segment with the acquisition of Dallas-based IntegraColor at a multiple of 6.9 times trailing EBITDA.
The stepped-up acquisition activity in the retail display market over the past year began in earnest in January 2016 when Oak Hill Partners acquired Imagine! Print Solutions which reported revenues in excess of $303 million. (for more about the market for companies in the POP printing segment, see The Target Report – January 2016).
In the more generalized commercial printing segment, Henry Wurst, a $70 million printing company in Kansas City, reached across to the other side of Missouri and acquired St. Louis-based Universal Printing Company which most recently reported $40 million in sales. Production will be consolidated in the Kansas City location, with some sales and client services remaining in St. Louis. Universal had previously announced its sale to Consolidated Graphics (CGX) back in June 2013 but was left at the alter in an unconsummated deal when CGX was itself acquired by RR Donnelley in October of the same year.
Packaging
Jansy Packaging, a design and outsource production agency headquartered in Fort Lee, New Jersey, with backing from Eureka Growth Capital, acquired Cogent Partners, which offers similar services out of its Pomona, California location. Both companies provide global sourcing of package manufacturing. Cogent’s headquarters located in the Dongguan manufacturing region of China strengthen the merged company’s outsourcing value proposition.
MPI Label Systems announced the acquisition of Label Gallery, a flexo and digital label printer located in Norwich, New York. The Ohio-based consolidator now has 11 plants located in 9 states, with over 500 employees. New Jersey-based Quality Packaging Specialists International (QPSI) acquired International Labs located in St. Petersburg, Florida. Both buyer and seller specialize in packaging for the pharmaceutical industry.
Morgan Stanley Capital acquired Fisher Container, a manufacturer of shrink packaging and bags. In a relatively upbeat market for corrugated packaging (see The Box is in Demand, The Target Report – October 2015), Kapstone Paper & Packaging acquired Associated Packaging, a producer of corrugated boxes, point-of-purchase displays and specialty packaging.
2017 February - Mergers and Acquisitions in the Printing, Packaging, Paper & Related Industries | |||||||||||||
Deal Party #1 (Surviving Entity) |
Pre-Deal Revenues ($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 |
|||
Go Modern (Div. Advisors Excel) |
No Data | Topeka, KS | More Than Banners | No Data | Topeka, KS | 2/25/17 | No Data | Acquisition | Wide format printing | Link | |||
Jansy Packaging (Port co. Eureka Growth Capital) |
No Data | Fort Lee, NJ | Cogent Partners | No Data | Pomona, CA | 2/22/17 | No Data | Acquisition | Packaging design & outsource | Link | |||
Orora | $2,986 | Hawthorn, Australia |
Graphic Tech | No Data | Fullerton, CA | 2/15/17 | No Data | Acquisition | Retail display | Link | |||
Orora | $2,986 | Hawthorn, Australia |
Garvey Group | No Data | Niles, IL | 2/15/17 | No Data | Acquisition | Retail display & packaging | Link | |||
Express Image | No Data | St. Paul, MN | SourceOne Graphics | No Data | Spring Lake Park, MN | 2/14/17 | No Data | Acquisition | Wide format printing | Link | |||
Superior Packaging & Finishing | No Data | Braintree, MA | Graphic Arts Finishers | No Data | Charlestown, MA | 2/13/17 | No Data | Acquisition | Trade bindery services | Link | |||
Deluxe | $1,850 | Shoreview, MN | RDM | $21.2 | Waterloo, Ontario | 2/13/17 | $52.5 | Acquisition | Financial processing systems | Link | |||
Henry Wurst | $70.6 | Kansas City, MO | Universal Printing | $40.0 | St. Louis, MO | 2/10/17 | No Data | Acquisition (New Direction) |
Commercial printing | Link | |||
MPI Label Systems | No Data | Sebring, OH | Label Gallery | No Data | Norwich, NY | 2/8/17 | No Data | Acquisition | Label printing | Link | |||
QPSI | No Data | Burlington, NJ | International Labs | No Data | St. Petersburg, FL | 2/7/17 | No Data | Acquisition | Pharmaceutical packaging | Link | |||
Bigname Commerce ( Port co. TZP Group) |
No Data | Amityville, NY | Folders.com | No Data | Mount Jackson, VA | 2/7/17 | No Data | Acquisition | Presentation products | Link | |||
ICON Digital Productions | $37.0 | Markham, ON | Toronto Trade Printers | No Data | Markham, ON | 2/6/17 | No Data | Acquisition | Commercial printing | Link | |||
Morgan Stanley Capital | No Data | New York, NY | Fisher Container | No Data | Buffalo Grove, IL | 2/3/17 | No Data | Acquisition | Shrink packaging & bags | Link | |||
AlphaGraphics North Austin (Franchisee) |
No Data | Austin, TX | AlphaGraphics Midtown | No Data | Austin, TX | 2/2/17 | No Data | Acquisition | Printing & copying | Link | |||
Electronics for Imaging (EFI) | $922.1 | Foster City, CA | FreeFlow Print Server business (Div. Xerox) |
No Data | Norwalk, CT | 2/2/17 | $22.0 | Acquisition | Digital front end servers | Link | |||
Kapstone Paper & Packaging | $3,080 | Northbrook, IL | Associated Packaging | No Data | Greer, SC | 2/1/17 | No Data | Acquisition | Corrugated packaging | Link | |||
2017 February - Bankruptcy Filings in the Printing, Packaging, Paper & Related Industries | ||||||||||||
Filing Party |
Date Case Filed |
Pre-Petition Revenues ($Mil ) |
Case # |
Filing Party Address |
Circuit |
Region & City |
Judge |
Attorney for Debtor |
Notes |
|||
Chapter 11 Filings: | ||||||||||||
M.O.R. Printing, Inc. | 2/8/17 | No Data | 17-11570 | Fort Lauderdale, FL | 11th | Southern FL Fort Lauderdale |
John K. Olson | Chad T. Van Horn | Commercial printing | |||
Chapter 7 Filings: | ||||||||||||
Hauser Printing Company Incorporated aka Garrity Print Solutions |
2/23/17 | No Data | 17-10409 | New Orleans, LA | 5th | Eastern LA New Orleans |
Elizabeth W. Magner | Tristan E. Manthey | Commercial printing | |||
McBattas Packaging & Printing, Inc | 2/17/17 | No Data | 17-40203 | Fairbury, NE | 8th | Nebraska Fargo, ND |
Shon Hastings | David P. Lepant | Commercial printing & folding cartons | |||
2017 February - 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 |
|||
Gannett - Printing facility | Jun-17 | No Data | Freehold, NJ | Gannett | McLean, VA | 2/16/17 | Consolidating print in Rockaway, NJ | Link | |||
Graphic Communications | 3/23/17 | No Data | Upper Marlboro, MD | None | N/A | Feb-17 | Commercial printing | Link | |||
World Wide Lines | Mar-17 | No Data | Covington, TN | None | N/A | Feb-17 | Screen and dye-sub printing | Link | |||
Sunshine Graphics | 3/15/17 | No Data | Miami, FL | None | N/A | Feb-17 | Commercial printing | Link | |||