Friday, July 8, 2022

Commercial Print Awakes from M&A Slumber – June 2022 M&A Activity


Commercial Print M&A Activity Falls During Covid Period

In the three years leading up to the pandemic that broke out in early 2020, M&A activity in the commercial printing segment, as we define it,* averaged 43 transactions per year. For the past two years, the number of M&A transactions in the commercial printing segment has fallen to 25 and 26 in each year, respectively, or otherwise stated, approximately two per month.

During the prior twelve months leading up to the end of the second quarter of 2022, there was one month with no M&A deals in the segment and four months with only one deal that we counted in the commercial printing segment. Of the 26 transactions in the twelve months ended June 2022, five of those occurred in just the past month. These numbers contrast with what we found in 2013, two years after we started the Target Report, when the average number of transactions in the commercial printing segment was close to 6 per month, every month. 

It is too soon to tell whether this might portend a return to the norm of the pre-pandemic era, however the nature of the transactions suggests some trends that are likely to continue even if the deal count does not.

Companies Do Not Live on Print Alone

Post Capital Partners announced the acquisition of Ironmark, a diversified provider of marketing production services located in Annapolis Junction, Maryland. The acquired company was originally focused solely on printing services and operated from 1955 to 2011 under the banner Frank Gumpert Printing. In 2011, the company merged with Corporate Printing Solutions and was renamed CPS Gumpert. According to the company’s website, the combined entities grew and began offering a multitude of graphic and marketing services in addition to traditional offset printing, expanding into digital and large format printing, graphic design and web development, event promotions, promo products and e-comm services.

In the press release announcing the purchase of Ironmark and establishment of the firm as a new platform for future investments, Post Capital introduces Ironmark to its audience as an “image company” with plans to “further build upon its omni-channel marketing delivery platform.” While not eschewing the company’s roots in printing, noting that Ironmark has a “strong legacy in print-based marketing solutions,” the announcement elaborates that the company “provides a fully-integrated suite of services including commercial print (digital, offset and wide-format), digital marketing and web development, creative agency, promotional products management and a range of logistics services including procurement, warehousing, kitting, mailing, and e-commerce fulfillment, which enables its customers to realize the benefits of spend and vendor management consolidation with a single, omni-channel provider.” The message is clear, this is not your grandfather’s printing company. Rather, this new platform within the private equity universe is a marketing services production engine.

Also in June, Graphic Village announced the purchase of Sunrise Hitek Group in Chicago. The acquired company provides a wide variety of printed products and extends Graphic Village’s footprint west to Chicago. Based in Cincinnati, Ohio and with backing from Revitalize Capital, Graphic Village has been a serial acquirer of a diversified collection of graphic service providers. Similar to Ironmark, Graphic Village has its beginnings as a pure commercial printer. Bramkamp Printing, a commercial printer, served as the core company, cross-selling services with other Cincinnati graphic companies including DocuPros Digital Printing, Premier Mail and Fulfillment, Everything’s Image apparel decorating, and Quality Custom Binders. Bramkamp and DocuPros eventually merged, taking on the name of the consortium Graphic Village as the new graphic services platform for Cincinnati-based private equity firm Revitalize Capital. 

Well down the pathway to being a diversified marketing services production provider, the first words on Graphic Village’s website set the tone with “Welcome to Graphic Village, your multichannel marketing solutions provider.” The inference is clear, this is not your run-of-the-mill printing company. (For more about Graphic Village’s acquisition journey, (see Regional Print Consolidator Builds Diverse Offerings - May 2020). 

Regional, Not National, Consolidation

In addition to extolling the virtues of its expanded services, Graphic Village explicitly noted that the location of the acquired company, Chicago, was a key strategic rationale behind the acquisition. This aligns with another clear trend we have noted. Healthy commercial printing companies are building out a regional network of locations via acquisition, in contrast to leaping right from a central base to a national strategy of networked commercial printing companies. That concept, which was the strategy du jour at the turn of the century, eventually faded as Consolidated Graphics (CGX), Cenveo (né Mailwell), Printing Arts America, and Nationwide Argosy, among others, all were acquired, absorbed, deconsolidated, or simply disintegrated back into separate printing companies. 

Representative of the current trend to build out regionally, Paper Airplane, a commercial printing company based in Birmingham, Alabama, acquired Colonial Printing and Packaging, located in Huntsville, Alabama. Paper Airplane announced that it was assuming operations at the Huntsville location and would offers services there as well as at its headquarters in Birmingham. The new location is approximately an hour and a half away, a good example of the regional trend consolidation trend we have seen elsewhere (see Commercial Printing: Consolidation or Regional Expansion? – November 2019).

There are exceptions to this regional consolidation trend. Missouri-based ColorArt, with backing from JAL Equity, has rapidly built up a network of acquired commercial printing companies, with locations ranging from Southern California and Las Vegas in the west, a smattering of locations in every state that connect from New Mexico all the way up to Michigan, east to Long Island in New York, and down to Florida. Ironically, in its most notable transaction, in June 2021, ColorArt acquired the commercial print division of the disintegrating Cenveo which included three major printing facilities (see CJK Goes Global as Cenveo Unwinds – September 2020). More recently, in February 2022, ColorArt acquired Cockrell Enovation, a commercial printing company in Fort Worth, Texas. The strategy is clearly national, opportunistic, and primarily print-centric.

In another twist of the patchwork of consolidation, deconsolidation, and re-consolidation, earlier this year the aforementioned regional consolidator Graphic Village picked up the Cincinnati division of formerly active consolidator OneTouchPoint. With backing from ICV Partners, OneTouchPoint was an active national player and an early proponent of layering marketing services on top of a network of print providers. However, OneTouchPoint has gone quiet on the buy side since right before the pandemic broke out in February 2020, when the company acquired Bluewater, a digital marketing services company. It remains to be seen if the sale of the Cincinnati operation to Graphic Village is a one off divestiture or the beginning of another deconstruction.

We have no doubt that these two trends will continue, exemplified by the recent uptick in deals within the broadly defined commercial printing segment. The stronger players will continue to move upstream from pure print providers and superimpose a myriad of marketing services on top of their basic analog and digital print capabilities. Some of those same top performers will also see regional expansion as their best path to growth since the overall market is, depending on who you ask, either stable or declining, but not increasing.

*In our lexicon, we draw a wide circle around the term “commercial printing” to include everything from the main street print and copy shops up to and including RR Donnelley. In essence, if the printed product of the acquired company is primarily used for marketing purposes, versus labels or folding cartons, for example, then we classify the transaction within the overall commercial printing category.

2022 June - Mergers and Acquisitions in the Printing, Packaging, Paper & Related Industries

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

Party #1 Address

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

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

Notes		Link
Green Bay PackagingNo DataGreen Bay, WIInterstate PackagingNo DataAlbert Lea, MN6/30/22No DataAcquisitionCorrugated cartonsLink
Fortis Solutions Group
(Port co. Harvest Partners)		No DataVirginia Beach, VAAnchor PrintingNo DataNovi, MI6/30/22No DataAcquisitionLabels & flexible packagingLink
Post Capital PartnersNo DataNew York, NYIronmarkNo DataAnnapolis Junction, MD6/22/22No DataAcquisitionMarketing production servicesLink
Carpenter Newsmedia
Affil. Boone Newspapers		No DataNatchez, MSDaily News of Bowling GreenNo DataBowling Green, KY6/22/22No DataAcquisition
Cribb, Cope & Potts		Community newspapersLink
TC Transcontinental$2,176Montreal, QCBanaplastNo DataArmenia, Colombia6/22/22No DataAcquisitionFlexible packagingLink
Central National Gottesman$6,200Purchase, NYLewis Paper InternationalNo DataAddison, IL6/20/22No DataAcquisitionPaper & supplies distributionLink
Association for PRINT Technologies (APTech)No DataFranklin, TNWhatTheyThinkNo DataSt. Paul, MN6/15/22No DataAcquisitionPrinting industry publisherLink
iSignNo DataBoyertown, PAAcorn Sign GraphicsNo DataRichmond, VA6/15/22$0.1363 Sale in Ch. 11Signage businessLink
Syracuse Label & Surround PrintingNo DataNorth Syracuse, NYMacaran Printing ProductsNo DataCohoes, NY6/13/22No DataMergerLabel printingLink
Minuteman Press Spokane ValleyNo DataSpokane Valley, WALancer Ltd. Commercial PrintingNo DataSpokane Valley, WA6/10/22No DataAcquisitionPrinting & copyingLink
SummaNo DataGistel, BelgiumValianiNo DataCertaldo, Italy6/9/22No DataAcquisitionFlatbed cutting devicesLink
Paper AirplaneNo DataBirmingham, ALColonial Printing and PackagingNo DataHuntsville, AL6/8/22$3.0AcquisitionCommercial printingLink
Fujifilm$22,500Tokyo, JapanUnigraphicaNo DataLiechtenstein6/8/22No DataAcquisitionPrinting system integratorLink
Electronics for Imaging (EFI)
Port Co. Siris Capital Group		$1,020Foster City, CAInèdit SoftwareNo DataBarcelona, Spain6/8/22No DataAcquisitionTextile printing softwareLink
Orbus Exhibit & Display Group
Port co. Tenex Capital Management		No DataWoodbridge, ILSEG Systems & ServicesNo DataCharlotte, NC6/6/22No DataAcquisitionRetail displaysLink
Graphic Village
(Port co. Revitalize Capital)		$22.0Cincinnati, OHSunrise HitekNo DataChicago, IL6/5/22No DataAcquisitionCommercial printingLink
Sigler CompaniesNo DataAmes, IAAlphaCopies (w/ FastSigns)No DataAmes, IA6/2/22No DataAcquisitionPrinting & copyingLink
A/E Graphics |Epic ColorNo DataBrookfield, WIB&L Graphic SolutionsNo DataJackson, WI6/2/22No DataAcquisitionWide format printingLink


2022 June - Bankruptcy Filings in the Printing, Packaging, Paper & Related Industries



Filing Party
Date
Case
Filed		Pre-Petition
Revenue
(US$Mil)


Case #


Filing Party Address


Circuit


Region & City


Judge


Attorney for Debtor


Notes
Chapter 11 Filings:
Premier Modern Commercial Printing Company6/7/22No Data22-41296Burleson, TX5thNorthern TX
Fort Worth		Edward L. MorrisMichael S. MitchellCommercial printing
Chapter 7 Filings:
No Chapter 7 Filings Found this Month---------------------------


2022 June - Non-Bankruptcy Closures in the Printing, Packaging, Paper & Related Industries



Closed Company / Facility
Date of Closure		Pre-Closure
Revenue
(US$Mil)


Closing Address		Related PartyRelated Party
Address		Date Closure Public


Notes
Press
Releases
No Plant Closures Found this Month------------------------
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Tuesday, June 7, 2022

Paper Industry in Transition – May 2022 M&A Activity


Paper-based Industries are in Flux

As a result of the changes occurring in the paper industry, many printing and packaging companies are struggling to procure the paper they need, the grades they require, at the time they would like, and in a sufficient quantity necessary to fulfill customer orders. This is an abrupt turnabout for many companies that have striven for years to increase customer orders, always completely confident that the required paper substrates would be available on a just-in-time basis. Distributors gladly stocked and warehoused multiple grades at their own expense, ready to ship immediately, and often delivered paper on demand with extended credit terms. Some printers even enjoyed paper stocked on their premises on a consignment basis, ensuring sufficient supply without tying up excess working capital.

At least for the foreseeable future, those days of paper plenty are over. Printing and packaging company owners report that they are spending considerable time every day just procuring needed paper stock. The efficiency inherent in longer run lengths is lost when orders are filled with multiple shorter runs requiring repetitive press makereadies. Fussy buyers have lowered their paper standards, accepting lesser grades in order to meet deadlines. Shortages are being filled in with substitute grades, sometimes several different papers used within the same print run. Distributors are enforcing paper allocation schemes based on prior years usage, hindering the growth of their printing industry customers. Credit terms have tightened considerably, with slow payers cut off or required to adhere to self-liquidating payment policies. Price increases have become routine, which must be passed on to customers who have and will consider other alternative (electronic) communication choices.

Exacerbating the problem, printing companies have been buying whatever paper they can get whenever it becomes available and stocking up. This is completely understandable as each company seeks to defend its own position and viability, but clearly this makes the problem worse for the industry as a whole. Building up inventory has its cost, occupying valuable space and increasing net working capital requirements. Eventually this will run its course, as the hoarded paper reaches an equilibrium with available space and capital. However, during the buildup phase of increased inventory levels, the hoarding tendency just makes the situation worse. Just like that other paper shortage, that of toilet paper when the pandemic broke out.

M&A Activity Hits All Levels of Paper Industry

The paper industry has been in flux over the past year, with transactions impacting all levels of the supply chain, from pulp to distribution.


Paper Making Consolidates, Specializes & Converts

Canadian-based Kruger acquired the DKP Pulp subsidiary of Domtar in a transaction that was a derivative forced sale by Domtar. The Canadian Commissioner of Competition required Domtar to divest the mill as a condition to approve its acquisition by Paper Excellence. DKP Pulp owns and operates the Kamloops Mill in British Columbia which produces softwood bleached pulp and unbleached softwood kraft pulp. Kruger announced that the acquisition will secure the supply of pulp for some of its paper mills, including in Quebec where the company is constructing two state-of-the-art tissue plants. Not limited to tissue papers, Kruger also makes coated publication printing grades, newsprint, and paper designed specifically for inkjet web presses.

In a transaction announced in May 2021, and closed late last year, 175-year-old publicly listed Domtar was acquired in an all-cash deal for $3 billion by the relative newcomer privately-owned Paper Excellence Group. Domtar, much larger and with 21 manufacturing facilities and customers in 50 countries, is now private and controlled by the much smaller British Columbia-based Paper Excellence company which operates seven mills in Canada. However, despite protestations to the contrary, Paper Excellence appears to have connections to and the backing of the billionaire Widjaja family of Indonesia, owners of Asia Pulp & Paper, among other corporate holdings. This relationship matters to those concerned with the environmental impact of deforestation and destruction of wildlife habitat, accusations that have plagued AP&P’s operations in Indonesia and Brazil.

Domtar is currently well on its way to complete the process of converting a printing and writing paper mill in Kingsport, Tennessee, into a containerboard mill. The mill was shut down in early 2020 in an effort to balance supply with demand for printing papers which had steadily declined. When the pandemic hit and the demand for printing papers temporarily plummeted, Domtar moved forward with tentative plans to convert the mill which was in the works before its acquisition by Paper Excellence. The conversion will be complete in late 2022 and the mill re‑configured to supply regional corrugators with products made from 100% recycled fiber. As a result, there will not be any more printing grade papers emanating from this mill. The general manager of the Kingsport mill recently confirmed Domtar’s long-term goal to convert additional mills to produce recycled containerboard products, including mills in Arkansas, Kentucky, and South Carolina. These are expensive capital projects, each conversion costing several hundreds of millions of dollars. Now with the backing of Paper Excellence, and the apparent family money supporting the North American investments, the handwriting is on the wall that funding will be in place to complete more conversions, further tightening supply in the market for printing grade papers.

Likely to be the most significant transaction impacting the printing industry is the sale of what’s left of Verso to Swedish paper company BillerudKorsnäs, announced in December 2021 and completed in March. The impact of this transaction will be keenly felt by the printing industry over the next seven years as BillerudKorsnäs executes its plan to convert approximately three-quarters of the acquired paper making capacity to paperboard grades designed for packaging applications. Longtime print industry veterans will recognize the name Escanaba as a production grade paper used in publications, catalogs, and commercial applications. The mill which gave its name to the paper grade, in Escanaba, Michigan, the largest in the Verso portfolio, is scheduled to be completely converted over to packaging grades. The resultant loss of capacity to produce printing grade papers will further tighten supplies to the commercial, book, direct mail, catalog, label, and publication segments of the industry.

In April, H.I.G. Capital, which has significant holdings in printing, packaging, and related companies, acquired Pixelle Specialty Solutions. Pixelle was formed in 2018 by PE firm Lindsay Goldberg with the express intent of building out a profile of specialty paper mills that eventually included four mill sites with twelve paper machines. Specialized papers produced by Pixelle include release papers, casting liners, book papers, carbonless form stock, security paper, and various other niche products. Two of the mills came from Verso Corporation, itself recently acquired. Notably, Pixelle assiduously describes its products as specialty grades and strives to find niches within the larger market for commodity printing grades.

For more detail about the transactions that have impacted the conversion to brown paper, as well as the move to specialty niches within the larger paper industry context, see Printing Papers Get Squeezed Out – February 2022).

Paper Distributors Move into Jan-San; Jan-San Moves into Paper

As the demand for printing papers declined over the past several years, the major paper distributors kept up a steady drumbeat of acquisitions, purchasing many of the formerly independent family-owned paper distribution companies. Lindenmeyr Munroe, subsidiary of industry giant Central National-Gottesman, recently acquired the much smaller New Jersey-based Paterson Papers, in a move indicative that the major pickings have already been plucked. Mac Papers & Packaging, a portfolio company of Monomoy Capital, acquired Dependable Packaging Solutions, a south-Florida based distributor of corrugated products, point‑of‑purchase displays and packaging supplies.

In another concurrent trend, paper distributors began to branch out and distribute other graphic supplies and, in some cases, acting as sales representatives for graphic production equipment including wide format machines. Further declines in demand precipitated the move by some into more generalized supplies related to the janitorial and sanitary needs of their customers’ facilities, otherwise known as the jan‑san business. Mac Paper & Packaging, Lindenmeyr Monroe, and Veritiv, all have jan-san offerings on their websites. In a transaction that portends possible moves in the other direction, Imperial Dade, a family-owned operation headquartered in Jersey City, New Jersey, acquired the Canadian business of Veritiv. Imperial Dade’s operations focus on supplies for food service, janitorial, other facility-related needs, and now print. The company has grown via acquisitions; Vertiv’s Canadian operations is Imperial Dade’s 47th purchase. Expect further blurring of the lines between jan-san and printing paper distributors, as printing paper distribution becomes less of a specialty and is subsumed under more broadly-based distribution companies.
     
2022 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
Allegra Marketing Print Mail No Data Asheville, NC Daniels Graphics No Data Asheville, NC 5/31/22 No Data Acquisition
(Graphic Arts Advisors)		 Commercial printing Link
Avery
(Div. CCL Industries)		 $4,664 Toronto, ON Floramedia Group $62.0 Westzaan,
The Netherlands		 5/31/22 $51.6 Acquisition Horticulture tags & labels Link
SugarHouse Industries No Data Salt Lake City, UT Imaginos No Data Murray, UT 5/31/22 No Data Acquisition Wide format printing Link
Quad-C Management No Data Charlottesville, VA Catapult Print and Packaging No Data Orlando, FL 5/26/22 No Data Acquisition Label printing Link
ProAmpac
(Port co. Pritzker Partners)		 No Data Cincinnati, OH Specialty Packaging No Data Fort Worth, TX 5/24/22 No Data Acquisition Bags, wraps & films Link
Kruger Specialty Papers
(Div. Kruger)		 No Data Montreal, QC DKP Pulp
(Sub. Domtar)		 No Data Kamloops, BC 5/12/22 No Data Acquisition Paper pulp mill Link
Phase 3 Marketing and Communications $27.8 Atlanta, GA Graphic Visions Unlimited No Data Atlanta, GA 5/11/22 No Data Acquisition Commercial printing Link
Brook + Whittle
(Port co. Genstar Capital)		 No Data North Branford, CT Diamond Flexible Packaging No Data Northbrook, IL 5/11/22 No Data Acquisition Flexible packaging & bags Link
Iconex No Data Duluth, GA Liberty Greenleaf No Data Phoenix, AZ 5/9/22 No Data Acquisition Receipt & packaging papers Link
Marquis Book Printing No Data Montreal, QC Logistics Services
(Div. Georgetown Terminal Warehouses)		 No Data Georgetown, OH 5/5/22 No Data Acquisition Book distribution services Link

   
2022 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:
Color Graphics R Us Design and Printing, Inc. 5/11/22 No Data 22-13858 Belleville, NJ 3rd New Jersey
Newark		 Vincent F. Papalia David L. Stevens Printing & copying
Chapter 7 Filings:
No Chapter 7 Filings Found this Month --- --- --- --- --- --- --- --- ---

   
2022 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
MC Packaging 9/8/22 No Data Farmingdale, NY None N/A May-22 Corrugated boxes & folding cartons Link
Benton Announcements 7/14/22 No Data Buffalo, NY None N/A May-22 Trade finishing Link
Sauers Group 7/1/22 No Data Stone Mountain, GA None N/A May-22 Commercial printing Link
Omega Printing 6/28/22 No Data Bensenville, IL None N/A May-22 Commercial printing - Tuck-in Sale Link
Hamilton Web Printing facility 6/9/22 No Data Stony Creek, ON Metroland Media
(Div. Torstar)		 Mississauga, ON May-22 Newspaper printing plant Link
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