Wednesday, July 7, 2021

Apollo Trades Textbooks for Wallpaper & Pillows – June 2021 M&A Activity


Global Management, the massive publicly traded alternative investment firm, acquired on-demand fabric printing company Spoonflower through its platform company, Shutterfly, the on-demand photobook printing company. The very next day Apollo announced that it was divesting its interest in McGraw Hill, the publisher of educational textbooks and digital content that serves educational markets.

Spoonflower has transformed the market for on-demand home décor within the soft goods categories. The on-demand digital printing platform enables consumers to design their own patterns on a multitude of products such as pillows, blankets, sheets, towels, curtains, tablecloths, napkins, and placemats. In the event you want matching walls with your chosen design motif, on-demand custom wallpaper is also offered. If you are handy with the needle and thread, fabric can be printed by the yard for you to sew your own creations. Available substrates include a variety of linens, cottons, polyesters and even spandex.

The company boasts that its platform hosts 3.3 million unique creative individuals that upload an average of 4,000 new designs every day. Over 25,000 designers have posted their designs into the public space on Spoonflower, available for consumers who browse through all the posted patterns to select, apply and order printed items. The designers are not hidden behind the Spoonflower façade, rather they are featured, lauded, awarded in ongoing design competitions, made known to consumers browsing the website, and paid a commission when their designs are ordered.

Strategically, the Spoonflower acquisition clearly fits into Apollo’s Shutterfly platform. Apollo acquired Shutterfly, the leader in the digital photo storage, prints processing and personalized merchandise segment, in June 2019 for $2.7 billion. Just to make sure that it would be the dominant player in the highly competitive and fragmented photo space, Apollo simultaneously snapped up Snapfish, the runner up to Shutterfly in the photo books and related online photo products printing segment. Included with the Shutterfly portion of the initial roll-up deal, Apollo also acquired Lifetouch, the school photography company that Shutterfly had itself previously purchased.

Other brands owned by Shutterfly include Groovebook, an app that prints monthly photobooks from its customers’ phones, and Tiny Prints, a printer of customized announcements, invitations, and note cards. The collective power and scope of Shutterfly’s on-demand printing capabilities enables consumers to customize their printed communications and environments, from birth announcements to graduation commemorations to home decorations. It’s one more vote of confidence from the big money folks in the future of printing, as long as its digital, on-demand, and personalized (see The Target Report: On Demand Everything – May 2021).

Platinum Equity announced the acquisition of McGraw Hill from Apollo one day after the Spoonflower deal was made public. Platinum Equity has significant holdings in companies that are print-centric, so is no stranger to print. However, it would be wrong to say that McGraw Hill, the purveyor of educational content, is really still a book publisher at its core. As we noted back in 2012 when Apollo acquired what was then called McGraw Hill Education, it seemed to us that Apollo’s goal was to use the textbook business as a launching pad for investment in digital educational products. At the time, publishers of educational textbooks were struggling as governments cut back on purchases of books and the transition to online digital content was past the initial gestation stage. (see The Target Report: Will Private Equity Accelerate Migration to Digital Content Delivery in Education? November 2012). With a purchase price of $2.3 billion at the time, McGraw Hill Education was considered a distressed asset in need of new direction and a systemic turnaround.

Lest there be any doubt about the move to digital delivery of educational content, Apollo’s senior partner who announced the sale to Platinum Equity complimented the McGraw Hill team which “demonstrated tremendous agility and innovation in transforming the company from a print-centric organization to one that today provides engaging, intuitive and effective digital products that help drive student success.” Under Apollo’s ownership, McGraw Hill acquired six digitally focused acquisitions that feature recurring revenues and higher margins. The business now generates more than $1 billion annually from digital products, representing in excess of 60% of total revenues, up from only 25% when Apollo initially acquired McGraw Hill’s education division. Even more impressive, digital products now represent 80% of revenues within McGraw Hill’s business segment that serves higher education.

Platinum’s stated mission in acquiring McGraw Hill is to continue the company’s dedication to support education globally, with a clear focus on investing in digital learning tools. Looking back on the past year of forced online learning, it looks like a good bet that printed textbooks, while not totally going the way of phonebooks, will be less and less the bedrock tool of learning in the future.

Direct Mail

Cathedral Corporation, an upstate New York-based direct mail company, announced the acquisition of Letter Concepts. The acquired company, located in Connecticut, is a highly specialized direct mail company, providing personalized, targeted, and segmented direct mail fundraising campaigns for Catholic dioceses. You might call it a marriage made in heaven, as Cathedral itself has more than a century of experience providing fundraising support services to Catholic churches and dioceses. Cathedral and its new acquisition address the specific needs of their target market with a mix of products and additional services that includes, among other items, offering envelopes, pledge reminder mailings, online donation websites, mobile giving applications, contribution tracking, check depositing, lockbox services, and social media advertising.

In another, but diametrically different, example of an acquisition of a direct mail company that services a highly targeted and defined market vertical, Intellus acquired South Jersey-based Maple Direct. The acquired company specializes in marketing for the casino gaming industry. With offset, digital printing, and laser personalization imaging capabilities, Maple has additional locations in Arizona, Florida and Louisiana. Intellus was formed in 2019 when IBS Direct purchased ClientLink, a direct mail and fulfillment company in Montgomeryville, Pennsylvania, a year after IBS Direct itself was purchased by Logan Marketing Group. With the addition of Maple Direct, Intellus now markets itself as a fully integrated marketing organization.

Specialty Print Communications, aka SPC, located in Niles, Illinois, purchased FuelPop Marketing. The company announced that the acquisition expands its robust printing and mailing capabilities into a “fully integrated marketing toolkit.” The acquired company provides creative services, hyper-targeting and integration of digital marketing.

   
2021 June - Mergers and Acquisitions in the Printing, Packaging, Paper & Related Industries

Deal Party #1
(Surviving Entity)
Pre-Deal
Revenues
(US$Mil)


Party #1 Address


Deal Party #2
Pre-Deal
Revenues
(US$Mil )


Party #2 Address
Date
Deal
Public
Deal
Value
(US$Mil)

Deal Structure
(Intermediary)


Notes

Press
Release
Mullen Group $1,140 Okotoks, AB QuadExpress
(Div. Quad)
No Data Sussex, WI 6/30/21 $40.0 Acquisition
(Mesirow)
Third party logistics Link
GSG No Data Dallas, TX McBee Supply No Data Houston, TX 6/30/21 No Data Acquisition Graphic supplies distributor Link
Smart Source No Data Suwanee, GA Cornerstone Media No Data Irondale, AL 6/29/21 No Data Acquisition Print management services Link
Kodak $1,030 Rochester, NY Service & Parts Business
(Div. Southern Lithoplate)
No Data Youngsville, NC 6/24/21 No Data Acquisition Printing plates Link
Intellus No Data Montgomeryville, PA Maple Direct No Data Pennsauken, NJ 6/21/21 No Data Acquisition Direct mail Link
Cathedral Corporation $44.0 Rome, NY Letter Concepts No Data Kensington, CT 6/16/21 No Data Acquisition Direct mail Link
Platinum Equity No Data Los Angeles, CA McGraw Hill
(Port co. Apollo Global Mgmt.)
No Data New York, NY 6/15/21 $4,500 Acquisition Educational publishing Link
Shutterfly
(Port co. Apollo Global Mgmt.)
No Data Redwood City, CA Spoonflower No Data Durham, NC 6/14/21 $225.0 Acquisition On-demand home décor Link
Wisconsin Media Group
(Affil. O'Rourke Media Group)
No Data Oregon, WI Unified Newspaper Group
(Div. Woodward Communications)
No Data Verona, WI 6/10/21 No Data Acquisition
(Cribb, Greene & Cope)
Community newspapers Link
Soteria Flexibles
(Port co. Ardian)
No Data Carol Stream, IL Redi-Bag No Data Tukwila, WA 6/10/21 No Data Acquisition Plastic wraps & bags Link
Delta Apparel  $391.8 Greenville, SC Autoscale.ai No Data Dallas, TX 6/8/21 $8.0 Acquisition Custom apparel automation Link
Specialty Print Communications $96.6 Niles, IL FuelPop Marketing No Data Lake Forest, IL 6/7/21 No Data Acquisition Advertising technology Link
Ennis $365.9 Midlothian, TX  AmeriPrint No Data Harvard, IL 6/3/21 No Data Acquisition Business forms Link
TC Transcontinental $2,065 Montreal, QC BGI Retail No Data Paris, ON 6/1/21 No Data Acquisition Wide format, in-store display Link


2021 June - Bankruptcy Filings in the Printing, Packaging, Paper & Related Industries



Filing Party

Date
Case
Filed
Pre-Petition
Revenues
(US$Mil)



Case #



Filing Party Address



Circuit



Region & City



Judge



Attorney for Debtor



Notes
Chapter 11 Filings:
Nieman Printing, Inc. 6/17/21 $29.2 20-31134 Dallas, TX 5th Northern TX Stacey G. Jernigan Eric A. Liepins Commercial printing
Dragonfly Graphics, Inc. 6/14/21 No Data 20-10110 Gainesville, FL 11th Northern FL
Tallahassee
Karen K. Specie Lisa Caryl Cohen  Screen & wide format printing
Chapter 7 Filings:
No Chapter 7 Filings Found this Month --- --- --- --- --- --- --- --- ---


2021 June - Non-Bankruptcy Closures in the Printing, Packaging, Paper & Related Industries



Closed Company / Facility

Date of Closure
Pre-Closure
Revenues
(US$Mil)



Closing Address
Related Party Related Party
Address
Date Closure Public


Notes

Press
Releases
Brodock Press 8/5/21 No Data Utica, NY None N/A Jun-21 Commercial printing Link
Gateway Printing & Graphics 8/12/21 No Data Hamburg, NY None N/A Jun-21 Commercial printing Link

Monday, June 7, 2021

On Demand Everything – May 2021 M&A Activity


Print quantity of one, available anywhere, anytime, on anything. The vision of on-demand printing, personalized to each unique recipient, is no longer limited to paper. Digital print technologies have created opportunities to efficiently and cost-effectively customize and uniquely decorate the full range of products we use every day, including the clothes we wear. Charlotte, North Carolina-based Printful has combined digital printing on fabrics with robust fulfillment systems and white-label storefront software, all conceived and implemented for on-demand production and shipping on behalf of brands and designers on a global basis.

The eight-year-old company was positioned perfectly to take advantage of the uptick in online ordering over the past year during the pandemic lockdowns. Revenues in 2020 grew 80% over the prior year and exceeded $200 million. Private equity firm Bregal Sagemount, based in New York, took notice and invested $130 million for a non-control minority position in Printful. While the exact proportion of the equity acquired was not disclosed, the founder of the company was rightfully proud to announce that the investment implies that the total enterprise value exceeds $1 billion, achieving “unicorn” status for the on-demand clothing and promotional items printing company.

This is not the first investment in digital printing for the Bregal global family of investment funds. The German arm, Bregal Unternehmerkapital, acquired the commercial printing company OnlinePrinters in 2016. Operating throughout Europe, the company produces primarily paper-based printed products, ordered via several branded online websites throughout the EU countries. Bregal was the second institutional investor in OnlinePrinters which was founded in 2004 and had grown to 600 employees under the prior ownership of PE firm TA Associates. With the guidance and financial support of Bregal, OnlinePrinters has more than doubled in size, with over 1,400 employees and a fleet of almost 200 printing units, including Heidelberg offset and HP digital presses. We expect that Bregal’s New York team is planning for Printful to follow a similar trajectory, carving out increasing share in the growing market for digitally printed custom apparel.

Commercial printed communications and informational printing (such as newspapers) have been hit hard over the past year. The conversion to online communications accelerated as a matter of necessity in lockdown. Companies such as Printful know that while we may not need printed brochures or newspapers in the future, almost everything else will still be printed and decorated. As we wrote about several years ago, companies such as EFI and others were not waiting around hoping that paper will remain dominant; forward-looking print-centric equipment manufacturers were aggressively acquiring innovative companies that had adopted digital printing technologies to fabrics (see the Target Report: EFI Walks the Digital Fashion Runway - July 2015). The future of print will increasingly be individually customized with the images we want, delivered wherever we want, printed on demand when we want, and applied to whatever products we choose.

Commercial Printing and Diversified Services

As if signaled by the outbreak of normalcy across the US, M&A activity has returned to the commercial printing segment. During the pandemic period (from March 2020 to April 2021), we have noted an average of 1.6 transactions per month, compared to the average of 3.4 commercial printing M&A transactions per month during the prior four years. While it is too soon to declare that the trend in May is a return to the norm, it may be an indication that owners of commercial printing companies are back in the market, to sell or buy.





















Prisma, the Phoenix, Arizona-based printing and marketing production services company, announced a duet transaction in Music City USA, with the simultaneous acquisition of Parris Printing and TruColor Litho. The two companies have been rebranded as Prisma Nashville. TruColor Litho moved into the Parris Printing facility and plans have already been announced to establish a new permanent Nashville campus for the combined companies in early 2022.

Thysse, located in Oregon, Wisconsin, which promotes itself as a design, printing, specialty graphics, and manufacturing company, purchased the Badger Group located in nearby Fort Atkinson. The acquired company brings a tradition of direct mail and commercial printing expertise and has been tucked into the Thysse location. Effectively bracketing the pandemic period with bookend acquisitions, Thysse announced its last acquisition, the purchase of wide format printing company Sign Edge, during the first week of March 2020.

All Service Graphics, a printing and mailing company located on the space coast in Florida, was acquired by Orlando-based Superior Press.* The transaction was a reverse tuck-in; Superior Press had outgrown its facility and moved its operations into the acquired company’s production facility. Superior Press plans to continue to grow, utilizing the acquired ready-made larger plant, with the bonus of an acquired customer base. The sellers, who own the facility, will eventually completely exit operational responsibilities, but retain the real estate assets now leased to Superior.

Heeter, a commercial printing company that has successfully transitioned to a comprehensive marketing services production company with expertise in direct mail, has acquired commercial printing company Duke Print & Mail. Heeter, located just outside of Pittsburgh, Pennsylvania, has announced that it will maintain the Duke brand and operations in Cleveland, Ohio. Heeter has joined a number of other printing companies strategically acquiring and operating satellite production facilities, consistent with the trend we have noted over the past couple years. This is in contrast to the wave of national roll-ups of yore (see The Target Report: Commercial Printing: Consolidation or Regional Expansion? November 2019).

Packaging

In contrast to M&A activity in the commercial printing segment, deals in packaging have continued at a steady average pace of 3.9 transactions per month during the pandemic period, exceeding the pre-pandemic average of 3.3 transactions announced per month over the prior four years. Despite the anomalous dip in February 2021, all indications are that the packaging segments, especially labels and flexible packaging, will remain red hot, and folding carton manufacturers will increasingly receive more attention.





















PPC Flexible Packaging, a portfolio company of Morgan Stanley Capital, announced its second deal during the pandemic period, acquiring Target Labels & Packaging in North Salt Lake, Utah. The acquired company adds to PPC’s presence in the western US, and produces flexo and digitally printed labels, rollstock, and pouches for nutraceutical, snack, confectionary, and specialty consumer product markets. PPC’s other deal during the lockdown was the purchase of Custom Poly Bag in December, one of the transactions we noted as indicative of the resurgence of interest in the manufacturing of the simple bag (see The Target Report: Bags, Pouches, Trays & Bowls – December 2020).

Novolex wrapped up an agreement to acquire Flexo Converters USA, a manufacturer of paper bags and sacks headquartered in Meriden, Connecticut with an additional plant in Monroe, Georgia. Novolex, with financial backing of the Carlyle Group, now has 55 manufacturing plants and more than 10,000 employees. The company operates its own plastic recycling centers but has noted that this latest acquisition is in response to an increase in consumer demand for paper bags.

Resource Label Group, a portfolio company of First Atlantic Capital, and a serial acquirer of label manufacturing companies, announced its fourth deal since the outbreak of Covid-19, bringing Tinley Park, Illinois-based Cypress Multigraphics into its family. Cypress Multigraphics was founded as an industrial printing company, using letterpress to manufacture durable labels and nameplates used in product identification. The company added screen printing, flexo and digital printing and expanded to roll label production. The transaction suggests another trend we have noted, increased interest in US-based industrial printing capability.

* Graphic Arts Advisors, publisher of The Target Report, served as exclusive advisors to All Service Graphics in this transaction.
  

2021 May - Mergers and Acquisitions in the Printing, Packaging, Paper & Related Industries

Deal Party #1
(Surviving Entity)
Pre-Deal
Revenues
(US$Mil)


Party #1 Address


Deal Party #2
Pre-Deal
Revenues
(US$Mil )


Party #2 Address
Date
Deal
Public
Deal
Value
(US$Mil)

Deal Structure
(Intermediary)


Notes

Press
Release
Paxton Media Group No Data Paducah, KY Landmark Community Newspapers
(46 titles)
No Data Shellyville, KY 5/26/21 No Data Acquisition Community newspapers Link
Bregal Sagemount No Data New York, NY Printful $200.0 Charlotte, NC 5/24/21 $130.0 Minority Interest On-demand products Link
Maxcess No Data Oklahoma City, OK OneBox Vision No Data Tipperrary, Ireland 5/20/21 No Data Acquisition Web inspection systems Link
Novolex
(Port co. Carlyle Group)
No Data Hartsville, SC Flexo Converters USA No Data Meriden, CT 5/17/21 No Data Acquisition Bag manufacturing Link
Smart Source No Data Atlanta, GA Superior Business Solutions $25.0 Kalamazoo, MI 5/17/21 No Data Acquisition
(Corp Dev Assoc)
Print management services Link
Thysse $15.0 Oregon, WI Badger Group No Data Fort Atkinson, WI 5/17/21 No Data Acquisition Commercial printing Link
Prisma No Data Phoenix, AZ TruColor Litho No Data Nashville, TN 5/17/21 No Data Acquisition Commercial printing Link
Prisma No Data Phoenix, AZ Parris Printing No Data Nashville, TN 5/17/21 No Data Acquisition Commercial printing Link
Graphic Packaging $6,610 Atlanta, GA AR Packaging
(Port co. CVC Capital Partners)
$1,100 Lund, Sweden 5/14/21 $1,450 Acquisition Folding cartons Link
Heeter $29.3 Canonsburg, PA Duke Print & Mail Solutions $6.9 Cleveland, OH 5/14/21 No Data Acquisition Commercial printing Link
Millcraft Paper No Data Cleveland, OH Dennis Paper No Data Nashville, TN 5/13/21 No Data Acquisition Paper distribution Link
Superior Press No Data Orlando, FL All Service Graphics
(Represented by Graphic Arts Advisors)
No Data Melbourne, FL 5/13/21 No Data Acquisition
(Graphic Arts Advisors)
Commercial printing Link
Elliott Investment Management No Data New York, NY Paper Source No Data Chicago, IL 5/11/21 $91.5 363 Sale in Ch. 11
(SSG Capital Advisors)
Specialty Paper Products Retail Link
Grimco Canada No Data North York, ON Cobalt Graphics
(Sub. Cansel)
No Data Surrey, BC 5/11/21 No Data Acquisition Graphic supplies distributor Link
Paper Excellence $2,400 Richmond, BC Domtar $3,560 Fort Mill, SC 5/11/21 $3,000 Acquisition Printing paper manufacturing Link
Community Newspaper Holdings No Data Montgomery, AL The Transylvania Times No Data Brevard, NC 5/10/21 No Data Acquisition
(Dirks, Van Essen)
Community newspaper Link
ImPRESSions Worldwide No Data Burlington, WA  Central Graphics No Data Romeoville, IL 5/10/21 No Data Asset Acquisition Web press sales & service Link
Resource Label Group
(Port co. First Atlantic Capital)
No Data Memphis, TN Cypress Multigraphics No Data Tinley Park, IL 5/6/21 No Data Acquisition Labels & nameplates Link
Vermont News and Media No Data Brattleboro, VT Bennington Banner (+3 titles)
(Prop. New England Newspapers)
No Data Pittsfield, MA 5/4/21 No Data Acquisition Regional newspapers Link
CCL Industries $4,393 Toronto, ON Lux Global Label Asia $9.2 Singapore 5/3/21 $9.4 Acquisition Label printing Link
PPC Flexible Packaging
(Port co Morgan Stanley Capital)
No Data Buffalo Grove, IL Target Labels & Packaging No Data North Salt Lake, UT 5/3/21 No Data Acquisition Labels & pouches Link
Colorado News Conservancy No Data Denver, CO Colorado Community Media
(24 titles)
No Data Englewood, CO 5/3/21 No Data Acquisition Community newspapers Link

   
2021 May - Bankruptcy Filings in the Printing, Packaging, Paper & Related Industries



Filing Party

Date
Case
Filed
Pre-Petition
Revenues
(US$Mil)



Case #



Filing Party Address



Circuit



Region & City



Judge



Attorney for Debtor



Notes
Chapter 11 Filings:
Cobra Ink Systems, Inc. 5/25/21 No Data 21-01651 Cookeville, TN 6th Middle TN
Nashville
Marian F. Harrison Steven L. Lefkovitz Digital printing inks
Morris Mailing, Inc. 5/17/21 No Data 21-06416 Wauconda, IL 7th Northern IL
Chicago
Jacqueline P. Cox John F. Hiltz Mailing services
Chapter 7 Filings:
Daniel Blue Print Company 5/24/21 No Data 21-60230 Waco, TX 5th Western TX
San Antonio
Ronald B. King Erin B. Shank Reprographic & commercial printing
G&A Label, Inc. 5/12/21 No Data 21-30379 El Paso, TX 5th Western TX
El Paso
H. Christopher Mott Carlos A. Miranda Commercial & wide format printing
Print House Plus, LLC 5/10/21 No Data 21-01284 Columbia, SC 4th South Carolina
Columbia
David R. Duncan Daniel J. Reynolds, Jr. Commercial printing
Images on Metal, Inc. 5/6/21 No Data 21-30735 Dodge, MN 8th Minnesota
St. Paul
Katherine A. Constantine Karl A. Kruger Screen printing

   
2021 May - Non-Bankruptcy Closures in the Printing, Packaging, Paper & Related Industries



Closed Company / Facility

Date of Closure
Pre-Closure
Revenues
(US$Mil)



Closing Address
Related Party Related Party
Address
Date Closure Public


Notes

Press
Releases
No Non-Bankruptcy Plant Closures Found this Month --- --- --- --- --- --- ---