Tuesday, November 7, 2023

On-Product Printing Promotes & Protects – October 2023 M&A Activity


Most of us do not have to read this label to instantly know that this patch is attached to a pair of the eponymous Levi Strauss original 501 denim blue jeans. The label and the look say it all, these are genuine Levi’s.

Marlon Brando wore a pair of Levi’s 501s in the 1953 movie The Wild One, forever changing blue jeans from farmers’ garb to the ultimate symbol of counterculture cool. James Dean solidified the hip image in 1955 in the film Rebel Without a Cause when his jeans stood out in stark contrast to the letterman sweaters and poodle skirts then popular on high school campuses. Marilyn Monroe made the stitching of the backside pockets famous in a photo for Life Magazine. More recently, Steve Jobs, Bruce Springsteen, Kurt Cobain, and Barack Obama, among many others, all made Levi’s 501s their cool uniform of choice. Regardless of the wearer, we immediately know authentic Levi’s jeans because they sport the printed leather patch (or faux leather nowadays) with the two-horses logo sewn onto the waistband. Printing lets us know that we have the real deal.

OpSec Group, headquartered in Lancaster, Pennsylvania, acquired Global Trim. Based in Yorba Linda, California, Global Trim provides a wide range of custom labels, tags, stickers, and patches for branded apparel. The company’s labels adorn many of the brands we admire and purchase. Highly focused and dedicated solely to serve the needs of the apparel manufacturing industry, the company utilizes many production technologies, including woven labels, printed cloth labels, highly decorated printed hangtags, printed heat transfers, molded silicon, and yes, even leather patches that are printed and debossed.

The buyer, OpSec Group, provides a range of services to protect brand identity and related intellectual property rights, including the management of trademark and brand licenses, monitoring compliance with government and brand regulations such as ethical sourcing requirements, product identification and traceability, enforcement of brand ownership, protection of online digital content, and product authentication technologies. Consistent with its corporate mission to protect intellectual property, with its acquisition of Global Trim, the company now provides distinctive product labels, hangtags, packaging, and other forms of identification that uniquely identifies its customers’ brands. Printing and imaging are integral to the recognition that we associate with the value of a product.

Brand Identity Meets On-Demand Mass Customization

Avery Dennison has announced the acquisition of the Silver Crystal Group. The acquired company manufactures custom sports jerseys that will match any jersey style, from any year, with any name and number, and with the exact fonts associated with the selected team. In the ultimate example of on-demand mass customization, the company has over 250 onsite mini-factories at sports arenas and major league stores where fans can order totally unique one-off versions of a personalized jersey at a user-friendly kiosk. The unique garment is produced on-site while customers watch the game. The jerseys are ready to be picked up when the game is over. Orders can also be placed on mobile and online e-commerce ordering platforms. It’s the apparel version of an automated on-demand white-paper workflow. (See The Target Report: On Demand Everything – May 2021).

Avery Dennison will be integrating the Silver Crystal Group into its Embelex division, hailed as a full-service end-to-end platform for on‑product branding, graphics, and trims. Technologies employed include printing of heat transfer graphics, woven labels and patches, embroidery, raised silicone screen printing, molded silicone, and welded screen printed plastic that can be embossed or debossed.

The Silver Crystal acquisition follows Avery Dennison’s acquisition earlier this year of another company that specializes in textile labeling. In January, the company acquired Syracuse, New York-based Thermopatch, which specializes in labeling, embellishments, and heat transfers for sportswear, industrial laundry, workwear, and other fabrics that need to be labeled or branded.

On‑Product Printing Promotes Safety

R-V Industries acquired the business of R.W. Hartnett, located in Philadelphia, Pennsylvania. The acquired company manufactures on‑product printing equipment for the pharmaceutical, nutraceutical, and confectionery industries. Founded in 1879, the company was established on Philadelphia’s “Printers Row,” just two blocks from the historic printing shop operated by Ben Franklin. In the 1800’s, the company maintained an inventory of machine parts and specialized in the repair of printing, bookbinding, and related machines. Shortly after the company’s founding, the company introduced a three-roller ink mill under its own name, competing with the German and English ink mills of the day. With over 60 employees, the company had developed a reputation as excellent mechanics and engineers.

In 1934, the Ford Gum Company, manufacturers of chewing gum and still in business today, asked the Hartnett engineers to design a machine that could print on gumballs. The success of the unique gumball printing machine led soon thereafter to the development of highly specialized printing presses that could print on tablets and capsules, a critical need for the burgeoning pharmaceutical business in and around Philadelphia. In 1949, the company applied for patents on the first tablet and capsule printing machines (it looks like an odd version of the Multilith offset press that I operated as a teenager). From the early 1950’s on, the company continued to develop patented machines capable of printing on little spherical-shaped objects, including not only pharmaceutical products, but jellybeans as well.

The acquisition of R.W. Hartnett is R.V. Industries’ second move into the on‑product printing segment this year. In June, the company acquired the Ackley Machine Corporation in Moorestown, New Jersey. The acquired company designs and manufactures machines that utilize rotogravure offset printing, with options to print in multiple colors and on both sides. Similar to its impact in other printing segments, inkjet technology has made inroads into the business of printing on objects that require non-contact marking. Lasers are employed in other machines for marking difficult-to-print object such as softgel tablets.

The slow, but steady, secular decline of paper-based commercial printing continues to erode the traditional segments of the printing industry that produce brochures, magazines, catalogs, and newspapers. At the same time, developments in on‑product printing technology have increased the options for what can be printed and labeled, strengthening brand identities and improving product safety. (See The Target Report: How Do You Print a Golf Ball? – July 2016). Combined with on-demand customer interfaces that enable mass customization, new methods of on‑product printing continue to open up new opportunities in print.
   
2023 October - 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
Minuteman Press, White Plains
(New franchisee)		 No Data White Plains, NY Alloy Printing No Data White Plains, NY 10/30/23 No Data Acquisition Printing & copying Link
Paxton Media Group No Data Paducah, KY The Southern Illinoisan
(Prop. Lee Enterprises)		 No Data Carbondale, IL 10/28/23 No Data Acquisition
(Dirks, Van Essen)		 Community newspaper Link
Kirkwood $64.0 Wilmington, MA DGI Invisuals
Div. DGI Communications		 No Data N. Billerica 10/27/23 No Data Acquisition Wide format printing Link
1Vision $45.0 Jackson, MS Preferred Marketing Solutions
(Sub. Papa John's International)		 No Data Louisville, KY 10/26/23 No Data Acquisition Marketing execution services Link
Ian Bernstein No Data Towaco, NJ Allstate Paper Box No Data Newark, NJ 10/24/23 No Data Acquisition Rigid boxes Link
OpSec Group $218.0 Lancaster, PA Global Trim No Data Yorba Linda, CA 10/19/23 No Data Acquisition Labels for apparel Link
Ennis $430.1 Midlothian, TX  Diamond Graphics No Data Bensalem, PA 10/13/23 No Data Acquisition Direct mail printing Link
Ennis $430.1 Midlothian, TX  Eagle Graphics No Data Annville, PA 10/13/23 No Data Acquisition Commercial printing Link
Avery Dennison $8,280 Glendale, CA Silver Crystal Group No Data Toronto, ON 10/11/23 $30.0 Acquisition Apparel customization Link
Labelink No Data Anjou, QC Sheraton Labels No Data Calgary, AB 10/6/23 No Data Acquisition Label printing Link
Parmarco No Data Roselle, NJ TLS Anilox No Data Salzkotten,
Germany		 10/6/23 No Data Acquisition
(Mazzone & Assoc.)		 Flexo anilox roll services Link
ProMach
(Port co Leonard Green & Partners)		 No Data Covington, KY Lofton Label & Packaging No Data Inver Grove Heights,
MN		 10/4/23 No Data Acquisition Label and flexible packaging Link
R-V Industries No Data Honey Brook, PA R.W. Hartnett No Data Philadelphia, PA 10/3/23 No Data Acquisition Industrial printing equipment Link
Interstate Graphics No Data Machesney Park, IL Corpro Signs No Data Loves Park, IL 10/2/23 No Data Acquisition Retail signage  Link
Grimco No Data Fenton, MO TubeliteDenco No Data Apopka, FL 10/2/23 No Data Acquisition Graphic supplies distributor Link

   
2023 October - 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:
Xpress Media Printing LLC 10/10/23 No Data 23-18258 Miami, FL 11th Southern FL
Miami		 Laurel M. Isicoff K. Drake Ozment Printing & copying
Chapter 7 Filings:
Trade Finishing and Graphic Services LLC 10/20/23 No Data 23-10881 Austin, TX 5th Western TX
Austin		 Shad Robinson Christy L. Heimer Trade bindery
Scribe Media LLC 10/16/23 No Data 23-10868 Austin, TX 5th Western TX
Austin		 Shad Robinson Lynn Hamilton Butler Self-publishing services
G&C Direct Mail Marketing, Inc. 10/13/23 No Data 23-32349 Dallas, TX 5th Northern  TX
Dallas		 Stacey G. Jernigan Victor D. Vital Direct mail printing

 
2023 October - Non-Bankruptcy Closures in the Printing, Packaging, Paper & Related Industries



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


Closing Address		 Related Party Related Party
Address		 Date Closure Public


Notes
Press
Releases
Quad/Graphics - Printing facility Dec-23 No Data Effingham, IL Quad Graphics Sussex, WI  10/25/23 Direct mail printing
(Formerly Worldcolor facility)		 Link
International Paper - Mill Q4-23 No Data Orange, TX International Paper Memphis, TN 10/18/23 Containerboard mill Link
EB Display Company 11/14/23 No Data Massillon, OH None N/A 10/15/23 Retail display & fixtures Link
Sappi - Paper mill Q1-24 No Data Stockstadt,
Germany		 Sappi Johannesburg,
South Africa		 10/10/23 Graphic paper and pulp mill Link
South Hill Enterprise Oct-23 No Data South Hill, VA Womack Publishing Chatham, VA 10/4/23 Community newspaper Link
Shields - flexible packaging plant Dec-23 No Data Coldwater, OH Novolex Hartsville, SC 10/2/23 Flexible packaging and films Link

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Saturday, October 7, 2023

Is a Soft Landing in Sight? – September 2023 M&A Activity

 [ËŒsôf(t) ˈlandiNG, ËŒsäf(t) ˈlandiNG]

soft landing (noun) · soft landings (plural noun)

 

1) a controlled landing of a spacecraft during which no serious damage is incurred.

 

2) in economics, a cyclical slowdown in economic growth that avoids recession. A soft landing is the goal of a central bank when it seeks to raise interest rates just enough to stop an economy from overheating and experiencing high inflation, without causing a severe downturn.


We noted last month in our annual review of printing, packaging, and related industry transactional activity that the past twelve months were characterized by a dip in the number of deals announced. This was the case in almost every category that we track, except for modest upticks in commercial printing, specialty products, and supplies distribution. (See The Target Report Annual Review: 2023 M&A Activity). Nonetheless, within the context that overall deal activity has cooled off from prior years, there is still a steady cadence of deals across all sectors, some of which will be transformative to our industry over the long term.

The classic signs of turbulence ahead have been in abeyance. Tuck-in transactions, in which the seller’s plant is closed and the business moved to the buyer’s production facility, were at or near historic lows. There were fewer bankruptcy filings in our industry this past year than in any year since we began The Target Report twelve years ago. The number of non-bankruptcy plant closures increased slightly, but remained close to the low point we recorded in 2022. As of this writing, the US economy, and our industry along with it, has avoided the hard landing that many predicted as the government largess ran out and interest rates increased.

Lest we be too sanguine about the certainty of a soft landing, we must note that in conversations with owners over the past six months, some tell us that the landing from Covid has not been smooth. Customers have begun to re-assert pricing pressure now that last year’s supply chain issues have mostly been sorted out and paper is generally available as needed. Lenders are more watchful and loan defaults have increased. Wages are increasing. Instead of a crash landing, we see a long tail of minor bumps and dips as the impact of the Covid pandemic and subsequent excesses is worked out over time. That is the view through the windshield, at least in the absence of a surprise event that might trigger a precipitous drop. Keep your seatbelts on, just in case.

Paper Manufacturing

After a couple weeks of rumors that a deal was afoot, Smurfit Kappa, based in Dublin, Ireland, announced a merger with US-based WestRock. When completed, the new company, to be named Smurfit WestRock, will have revenue of $34 billion and adjusted EBITDA of $5.5 billion. Despite being the smaller of the two, Smurfit shareholders will hold a majority of the combined shares and Smurfit senior management will lead the company which will be headquartered in Dublin. The North and South American operations will remain based in Atlanta, Georgia. The merger brings together two integrated paper producers with paper mills, packaging plants, and forestry operations.

WestRock itself is the result of the consolidation of the paper industry in the US, with origins dating back to 1846. Along the way, the operations of the Mead Paper Company and RockTenn were brought into the fold, among other acquisitions. (See The Target Report: The End of the Line for MeadWestvaco – January 2015)

Smurfit Kappa was established as a box-maker in Ireland in 1934. In 1998, Smurfit merged with Chicago-based Stone Container, after which the company was acquired by private equity firm Madison Dearborn Partners. Subsequently, the company merged with Kappa Packaging and then returned to the public markets in 2007. The pending deal with WestRock will create the largest publicly held global paper and packaging business. The new entity will be a global fiber-based business operating in 42 countries, with 67 mills, approximately 500 converting operations, and 100,000 employees.

Paper Distribution

Paper distribution is also in transition. Clayton, Dubilier & Rice (CD&R), one of the granddaddies of private equity, recently announced that it had entered into a definitive agreement to acquire Veritiv. With revenue in 2022 of $7.1 billion, Veritiv looms large in the supply chain for many printing and packaging companies. In just the corrugated segment alone, in 2022 Veritiv distributed hundreds of millions of boxes that represented more than 4 billion square feet of corrugated material and more than 400,000 tons of kraft paper. In the fine printing papers segment, Veritiv sold and delivered more than 485,000 pallets of paper. In an indication of confidence in its ability to maintain profitable control over the paper supply chain, CD&R is paying a 31% premium over Veritiv’s 30-day trailing average share price.

Paper Mills Closing

The shuttering of paper mills continues unabated. Domtar, a division of the Paper Excellence Group, announced that it is indefinitely shutting down operations at its pulp and paper operations at its Espanola mill located on the Spanish River in Ontario, Canada. The mill had been up for sale in anticipation by Domtar that it would be required to divest certain mills in order to gain approval from the Canadian Competition Bureau to purchase Resolute Forest Products. While Domtar was not required to sell this particular mill, and the deal with Resolute closed earlier this year, no buyer for the Espanola Mill has been found to date.

Citing years of high costs and ongoing operating losses, Domtar is mothballing the pulp and papermaking operations at Espanola. The closure will take approximately 280,000 tons of softwood kraft pulp and 69,000 tons of specialty papers out of the supply chain. According to Domtar, the pulp from the Espanola mill is used to manufacture tissue and towel products, but more importantly to our readers, the pulp from Espanola is well-suited for and also used for medical packaging, coated and uncoated specialty products, printing and writing paper grades.

The closure of the Domtar Espanola mill follows right on the heels of WestRock’s announcement in August that it is permanently ceasing operations at its paper mill in Tacoma, Washington. This closure took 510,000 tons of kraft and white top liner and bleached pulp production capacity out of the market. WestRock noted high operating costs and the need for significant capital investment as factors in its decision to close the mill.

Six days before the WestRock announcement to close the Tacoma mill, UPM Communication Papers announced its plan to permanently close its paper mill in Plattling, Germany. The closure of the Plattling mill will result in a reduction from the market of 380,000 tons of uncoated publication paper and 215,000 tons of coated publication paper. UPM cited the need to align its graphic paper capacity with a profitable level of customer demand.

Landing the Paper Airplane

The recent merger of Smurfit Kappa with WestRock, the move of Veritiv to a private equity platform, and the closures of paper and pulp mills are just the latest in a long string of transactions that are transforming the amount and type of paper supply to the printing and packaging industries. (See The Target Report: Paper Industry in Transition – May 2022)

As with the larger economic picture, it appears that the paper market has managed a soft landing. However, the recent transactions and plant closures suggest that the consolidation and rationalization of production capacity will produce some turbulence along the way.
   

2023 September - 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
Modern Litho $50.6 Jefferson City, MO Direct Impaqt No Data Columbia, MO 9/26/23 No Data Acquisition Commercial printing Link
Durst Group No Data Brixen, Italy Aleph No Data Como, Italy 9/19/23 No Data Acquisition Inkjet printers Link
CJK Group $631.0 Brainerd, MN Joe Christensen $87.0 Lincoln, NE 9/19/23 No Data Acquisition Publication printing Link
Mason Wells No Data Milwaukee, WI Accord Carton No Data Alsip, IL  9/18/23 No Data Acquisition Folding cartons Link
Western States Envelope & Label No Data Butler, WI Vision Envelope No Data Charlotte, NC 9/13/23 No Data Acquisition Envelope manufacturing Link
Cooper Watson No Data Easton, PA Tower Products No Data Easton, PA 9/13/23 No Data Acquisition Pressroom chemicals Link
Charlotte Publishing Company
(Affil. North State Media)		 No Data Charlotte, NC Charlotte Print Operations
(Div. McClatchy)		 No Data Charlotte, NC 9/12/23 No Data Acquisition Newspaper printing Link
Smurfit Kappa $12,270 Dublin, Ireland WestRock $20,720 Norcross, GA 9/12/23 $11,000 Merger Paper & packaging Link
Valsoft No Data Montreal, QC DemandBridge No Data Hunt Valley, MD 9/11/23 No Data Acquisition Distributor software Link
Welch Packaging Group No Data Elkhart, IN AtCorr Packaging Products No Data Glasgow, KY 9/11/23 No Data Acquisition Corrugated boxes Link
Greif $5,410 Delaware, OH ColePak No Data Urbana, OH 9/7/23 No Data Acquisition Corrugated box partitions Link
Beaufort Media Group No Data Sumter, SC Lowcountry Local Media
(2 titles)		 No Data Bluffton, SC 9/6/23 No Data Acquisition
(Dirks, Van Essen)		 Community newspapers Link
Wick Communications No Data Sierra Vista, AZ Arizona Daily Sun
(Prop. Lee Enterprises)		 No Data Flagstaff, AZ 9/5/23 No Data Acquisition
(Dirks, Van Essen)		 Regional newspaper Link
Cahaba Media Group No Data Birmingham, AL Graphics Pro
(Prop. National Business Media)		 No Data Westminster, CO 9/1/23 No Data Acquisition Printing industry publisher Link
CJK Group $631.0 Brainerd, MN Worzalla $87.0 Stevens Point, WI 9/1/23 No Data Acquisition Book manufacturing Link

   
2023 September - 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:
Westpack Holdings, Inc. 9/1/23 No Data 23-02033 Muskegon, MI 6th Western MI
Grand Rapids		 Scott W. Dales A. Todd Almassian Corrugated boxes & fillers
Chapter 7 Filings:
SalesRup Media, Inc.
dba Texas Real Estate Magazine		 9/9/23 No Data 23-32003 Granbury, TX 5th Northern TX
Dallas		 Michelle V. Larson Donald E. Hood Magazine publishing
Canada Insolvency Filings:
Metroland Media Group
(Sub. Nordstar Capital LP)		 9/15/23 No Data --- Mississauga, ON Superior Court
Ontario		 N/A Steven L. Graff Newspaper publishing (70+ titles)

   
2023 September - Non-Bankruptcy Closures in the Printing, Packaging, Paper & Related Industries



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


Closing Address		 Related Party Related Party
Address		 Date Closure Public


Notes
Press
Releases
Angstrom Graphics Oct-23 No Data Cleveland, OH None N/A Sep-23 Commercial printing Link
Domtar - Kraft paper mill Nov-23 No Data Espanola, ON Paper Excellence Group Richmond, BC 9/6/23 Kraft pulp & specialty paper mill Link

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