Sunday, November 4, 2012

Does the Vertis “Chapter 33” Signal the End for Printing industry’s Best Known Names? – October 2012 M&A Activity

Vertis, the financially challenged publisher of ubiquitous newsprint advertising inserts, now qualifies as a serial bankruptcy filer. Vertis filed Chapter 11 for the third time (a rare, but not unheard of, “Chapter 33”), in anticipation of the sale of its assets to Quad Graphics. In related filings, two other affiliated companies, both venerable industry names, Webcraft and American Color Graphics, filed Chapter 11 on the same day as Vertis, each also filing motions with the Bankruptcy Court for Joint Administration with Vertis. In an amazing list of aliases, Vertis and its co-filers indicate that their businesses are “aka”: Vertis Advertising Solutions Services, Image Tap, Vertis Logistics, Vertis Communications, Vertis Creative, Vertis Logistics Services, Adout, Lot 44, Printco, Vertis Advertising Production Services, Forte Studios, Vertis Receivables II, Enteron Group, Imagination Brewery, LTC Group, The Color Company, American Color Packaging, ACG Holdings, Gowe Printing Company, ACG Canada, GBP Industries, American Images, Sullivan Graphics, Sullivan Marketing, American Color Premedia, American Color, Flexi-Tech Graphics, AC Packaging, The Visus Group, Sullivan Media Corporation, Digiscope, American Color Print, American Images of North America, Vertis Communications, Shakopee Valley Printing, AC Studios of American Color, AC Studios, 24* Street Group, American Color Print, Mail Efficiency, Vertis Newark, 5 Digit Plus, American Color Graphics, Webcraft and of course, just plain “Vertis”. I suspect that if Quad Graphics prevails in its bid to acquire the Vertis assets in the pre-packaged 363 sale process, many of these names will be retired and Vertis will be out of the bankruptcy business.

SGS International, backed by Onex Partners III, is on the deal log for the second month in a row, acquiring Stevenson Color, a packaging and prepress company in Cincinnati, OH. This follows its acquisition last month of the packaging prepress division of Vertis (presumably sold by Vertis in preparation for the aforementioned bankruptcy filing). Do these transactions indicate the formation of a major new presence in the brand management and deployment space now dominated by Schawk and a couple other global players?

FujiFilm Holdings International purchased the Business Service Provider division of Salmat Ltd. In Australia, rebranding the service under its Fuji Xerox name, focusing on its ability to manage data and documents as the company continues to evolve from its traditional strengths in manufacturing film, plates and processing equipment.

In an unusual vertical move up the value chain in 2010, Mohawk Papers acted as a venture capital investor behind Pinhole Press, an online photo printing service that prints photos for consumers. Dedicated to “beautifully simple” products, the service prints exclusively on papers made by Mohawk Fine Paper, a mill that was one of my favorites in my early career when I specified paper for clients. I often suggested the mill’s premier paper, “Mohawk Superfine,” when a client asked for my advice, and they wanted a superb and subtle finish in an uncoated sheet. I still remember the look and feel of the finely textured paper and the even and smooth lay-down of a double-hit of super warm red. Those uncoated sheets sure were super.
2012 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
SGS International No Data Louisville, KY Stevenson Color No Data Cincinnati, OH 10/23/12 No Data Acquisition Packaging & retail prepress Link
liveBooks No Data Sausalito, CA Pinhole Press, Pinhole Pro No Data Waterford, NY 10/16/12 No Data Acquisition Printed photo gifts Link
FujiFilm Holdings Corporation ¥2,195 Tokyo, Japan Business Service Provider
Salmat Ltd.		  AU$316 Matraville, Australia 10/11/12  AU$375 Acquisition Document processing Link
Quad Graphics $4,324 Sussex, WI Vertis Communications $1,100 Baltimore, MD 10/11/12 $258.5 363 Asset purchase Advertising inserts Link
Revolution Capital Group No Data Los Angeles, CA Tampa Tribune No Data Tampa. FL 10/9/12 $9.5 Acquisition Newspaper publisher Link
Wingate Partners No Data Dallas, TX Nekoosa Coated Products No Data Nekoosa, WI 10/2/12 No Data Acquisition Mfg. of specialty papers Link
Herrmann Printing & Litho No Data Pittsburgh, PA Enhanced Digital Printing No Data Export, PA 10/2/12 No Data Merger Cross-media commercial print Link
Sartori Software No Data Seattle, WA SAP Postalsoft Presort No Data Walldorf, Germany 10/2/12 No Data Acquisition Mailing prep software Link
Electronics for Imaging (EFI) $591.6 Foster City, CA Online Print Solutions (OPS) No Data Sydney, Australia 10/1/12 No Data Acquisition Web-to-Print applications Link



2012 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:
Tech Bindery, Inc. 10/10/12 No Data 12-44046 Santa Fe Springs, CA 9th Central CA
Los Angeles		 Neil W. Bason Marcus Gomez Bindery services
Vertis 10/10/12 $1,100 12-12823 Baltimore, MD 3rd Delaware
Wilmington		 Mary F. Walrath Jason M. Madron Advertising inserts
American Color Graphics 10/10/12 No Data 12-12826 Baltimore, MD 3rd Delaware
Wilmington		 Mary F. Walrath Jason M. Madron Filed for Joint Administration w/ Vertis
Webcraft 10/10/12 No Data 12-12822 Baltimore, MD 3rd Delaware
Wilmington		 Mary F. Walrath Jason M. Madron Filed for Joint Administration w/ Vertis
Chapter 7 Filings:
GRL Packaging, LLC 10/31/12 No Data 12-25391 New Castle, PA 3rd Western PA
Erie, PA		 Carlota M. Bohm  Frank G. Verterano Corrugated boxes & displays
Fife Packaging 10/17/12 No Data 12-13204 Hooksett, NH 1st NH
Manchester		 J. Michael Deasy Kevin P/ Chrisholm Beverage carriers
Superior Mailing & Printing Services, Inc. 10/9/12 No Data 12-62615 Richmond, MI 6th Eastern MI
Detroit		 Walter Sharpero Michael A. Greiner Printing and mail services
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Sunday, October 7, 2012

Has the “Strategy du Jour” Run its Course for Commercial Printers? – September 2012 M&A Activity

September was a tough month for the printing and related industries. After a very quiet summer, there were several Chapter 11 bankruptcies, spanning the commercial, wide format and newspaper sectors.

I have been wondering when the expansion into wide format printing by so many commercial printers would catch up with the industry. Formerly a niche offering served by specialty shops, adding wide format capabilities has become the “strategy du jour.” This approach has been touted in industry publications and enabled by increasingly sophisticated, but easy to use, inkjet devices. We have noted several small sign shops that closed over the past year and, in September, a much larger player in the wide and grand format business developed corporate indigestion. Image Transform, located in Des Moines, Iowa, filed for Chapter 11 after more than 35 years draping buildings, wrapping buses and serving up all sorts of wide format products.

The Journal Register Company, publisher of multiple newspapers, filed Chapter 11 for the second time in just four years, also affectionately known in bankruptcy circles as a “Chapter 22.” Several publishers that are related to the Journal Register Company also filed for bankruptcy (we only listed the parent company in the deal log). The company reports that it has a “stalking horse” credit bid lined up, and that it expects to emerge from bankruptcy this time as a healthy company. Another publisher, Rural Newspapers, headquartered in Tennessee and much smaller than the Journal Register Company, gave up and filed for Chapter 7 liquidation. In another transaction indicative of the ongoing struggle for survival in the newspaper industry, White Birch Paper Company, maker of newsprint paper, announced that it had completed its restructuring with the support of private equity fund Black Diamond Capital. Vertis, the financially challenged publisher of ubiquitous newsprint advertising inserts, monetized non-core assets and sold SGS International, its prepress company that specializes in packaging.

Our research found two commercial printers that voluntarily filed for protection of the bankruptcy court, hoping to wash away their debt and emerge cleansed and ready to compete once again. Two small commercial printers threw in the towel and filed for liquidation under Chapter 7. In a move that reportedly surprised its employees, Finlay Printing, a highly respected commercial printer in Bloomfield, Connecticut, washed out and closed its doors after more than 135 years in business.

In separate deals that do not appear to be distress acquisitions, two packaging printers acquired non-packaging companies, adding new services. Private equity-backed industry powerhouse WS Packaging Group acquired Business Graphics Printing, a very small commercial printer in Knoxville, Tennessee, reportedly for the company’s product insert printing capabilities. In another transaction, Salem Printing, a flexo commercial and packaging printer, acquired direct mail printer Advanced Direct in Greensboro, North Carolina. 

 Continuing the trend towards diversification of services in the printing industry, two deals were announced in which industry-disruptive, print-centric companies acquired firms that offer promotional products. Innerworkings, the wildly successful intermediation company, purchased Merchandize Mania, a UK-based firm which provides corporate promotional merchandise to clients in Europe and Asia. Shutterfly, which identifies itself as the “leading Internet-based social expression and personal publishing service,” bought Penguin Digital. The acquired company uses proprietary apps that enable consumers to order individual personal items printed with images downloaded directly from mobile devices. Although they serve very different markets, one corporate and the other consumer, we see these two companies and their recent acquisitions as prime examples of the new strategies for prospering in printing and related industries.
2012 September - 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
WS Packaging Group No Data Green Bay, WI Business Graphics Printing No Data Knoxville, TN 9/28/12 No Data Acquisition Commercial printing & inserts Link
SGS International No Data Louisville, KY Vertis $1,200 Baltimore, MD 9/20/12 No Data Acquisition - Partial Packaging prepress Link
BD White Birch Investment LLC No Data Greenwich, CT White Birch Paper Company No Data Quebec City, QC 9/18/12 No Data Acquisition Newsprint paper mfg. Link
H.I.G. Europe No Data London, UK Vacumet Paper No Data Franklin, MA 9/17/12 No Data Acquisition Metallized Papers Link
Shutterfly $91.3 Redwood City, CA Penguin Digital No Data New York, NY 9/17/12 No Data Acquisition Promotional items photo app Link
Innerworkings $633.0 San Francisco, CA Merchandise Mania £6.0 UK 9/12/12 No Data Acquisition Promotional items Link
RR Donnelley $10,611 Chicago, IL Express Postal Options No Data Torrance, CA 9/10/12 No Data Acquisition Mailing services Link
Salem Printing No Data Winston-Salem, NC Advanced Direct No Data Greensboro, NC 9/5/12 No Data Acquisition Flexo packaging & direct mail Link
Acme Bookbinding No Data Boston, MA HF Group No Data N. Manchester, IN 9/1/12 No Data Merger Bookbinding Link


2012 September - 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:
Ultimate Print Source, Inc. 9/28/12 No Data 12-32250 Ontario, CA 9th Central CA
Riverside		 Mark D. Houle Stephen W. Johnson Commercial printing
Image Transform, Ltd. 9/21/12 No Data 12-02967 Grimes, IA 8th Southern IA
Des Moines		 Anita L. Shodeen Michael P. Mallaney  Grand format & display printing
Total Printing Services, Inc. 9/10/12 No Data 12-60540 Van Buren, MI 6th Eastern MI
Detroit		 Walter Shapero Jason Patrick Smalarz Stationary printing
Journal Register 9/5/12 No Data 12-13774 Yardley, PA 2nd Southern NY
New York		 Stuart M. Bernstein Neil E. Herman Newspapers & web-based news
Newcomb Print Communications 9/5/12 No Data 12-08042 Harbert, MI 6th Western MI
Grand Rapids		 Scott W. Dales Donald C. Darnell Commercial printing
Chapter 7 Filings:
Brasil Printing Corp. 9/25/12 No Data 12-14032 Bronx. NY 2nd Southern NY
New York		 Burton R. Lifland Pro Se Printing & copying
Lithographic Technologies, Inc. 9/20/12 No Data 12-15655 Woodbridge, VA 4th Eastern VA
Alexandria		 Brian F. Kenney Steven B. Ramsdell Commercial printing
Rural Newspapers, Inc. 9/7/12 No Data 12-08199 Red Boiling Springs, TN 6th Middle TN
Nashville		 Keith M. Lundin Steven L. Lefkovitz Community newspapers
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