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