Year in Review — Big Deals Make Comeback
BIG NAMES were on the move in 2007. It was a year in which major mergers and acquisitions jammed the headlines of our news pages. And some deals never quite got off the ground, while others are in a holding pattern.
There was an explosion of headline grabbers to open 2007, led by a pair of major transactions and a political coup for the industry. Having been thwarted in his efforts to acquire Banta Corp. by RR Donnelley on Halloween 2006, Cenveo Chairman and CEO Bob Burton hammered out a deal to acquire Cadmus Communications for $24.75 a share, or a total of $430 million.
But Donnelley wasn’t about to lose some of its thunder. The Chicago-based giant then added Perry Judd’s to its impressive list of additions. And, for the second time in the final few months of 2006 (Banta being the first), North America’s largest printer speared its conquering flag through the great state of Wisconsin. By late January, Donnelley had decided to shutter Banta’s Menasha (WI) headquarters.
Transactions might have dominated the campaign, but a few major issues saw some degree of resolution in 2007. Their ramifications, however, may not be felt completely for several years to come.
The prayers of many in the mailing industry were answered when Congress pulled off a shocker by passing postal reform legislation during the lame duck session of Congress. The move is expected to help stave off the “death spiral” of increasing rates and decreasing volumes. However, a rate case later in the year would create more howls by direct marketers forced to redesign their mailers.
Quebecor World made some tough decisions to improve the viability of its magazine platform, including the closure of its Lincoln, NE, plant. Roughly 550 jobs were lost.
February meant a second chance for many of the 380 or so workers of the defunct Sunny Industries in Mazomanie, WI, when it was acquired at auction by Synergy Graphics of Plymouth, MN. Synergy reopened Sunny, which had closed down shortly before Christmas, and brought back many of its employees.
Facing mounting debt and an untenable renting situation, the Association for Graphic Communications (AGC) filed Chapter 7 liquidation bankruptcy and dissolved. PIA New York State later took over the AGC territory and renamed itself Printing Industries Alliance.
Cenveo went back to the M&A well, plucking Printegra Corp. of Peachtree City, GA. Printegra, a $90 million label, envelope and business forms specialist, brought with it 14 U.S. manufacturing facilities.
The big dogs continued to dominate the news pages when Donnelley saw a change at the top of its leadership. Thomas Quinlan replaced Mark Angelson as president and CEO. Angelson, who took the CEO reins at Donnelley in 2004, helped engineer the merger between Moore Corp. and Wallace Computer Services.
Tragedy struck a California printer when a part-time worker—angered by a reduction of his work hours—opened fire on three co-workers before killing himself. Fortunately, all of the shooting victims survived. The disgruntled employee of Kenyon Press actually shot the three fellow employees who had helped him obtain employment at the custom menu printing operation.
Houston-based Consolidated Graphics (CGX) signed a letter of intent to acquire family owned Hopkins Printing of Columbus, OH. But not every engagement results in marriage; the deal fell through and, by the end of the year, Hopkins Printing devised an employee stock ownership plan (ESOP).
A complaint filed by NewPage Corp. briefly led to stiff penalty tariffs from the U.S. Department of Commerce (DOC) levied against Asian coated free sheet paper sources, notably China, Indonesia and Korea. From 2004 to 2006, U.S. paper imports from China went from $29 million to a staggering $224 million. However, the tariffs were surprisingly overturned in late November by the U.S. International Trade Commission in a 5-1 decision.
Spring brought tragedy as a private plane carrying five printers crashed off the coast of Florida, killing all on board. The men were bound for a weekend fishing excursion in the Bahamas. The printers were employed by Identity Graphics and Printing of Ft. Lauderdale, FL, and Crystal Image Graphics of Hallandale, FL.
Chris Colville surprised some with the announcement that he was leaving Consolidated Graphics to pursue other interests. Colville was executive vice president and CFO for CGX, but had earned a stout reputation (and later in the year, a berth in the Printing Impressions/RIT Printing Industry Hall of Fame) as an expert in negotiating transactions. In recent years, Colville had handed over CGX’s M&A duties to Jim Cohen.
As the summer heated up, so did the transaction wire. One move saw EarthColor Inc. of West Orange, NJ, obtain high-end web and sheetfed commercial printer L.P. Thebault of Parsippany, NJ.
Cenveo pulled double time, picking up Los Angeles-based Color- Graphics and Commercial Envelope Manufacturing of Deer Park, NY. ColorGraphics ranked 48th on the 2006 Printing Impressions 400 with $147-plus million in annual sales. Commercial Envelope chipped in its $160 million in yearly revenues.
Some M&A deals are still in process, however, including Baltimore-based Vertis Communications and its bid to acquire American Color Graphics of Brentwood, TN. The companies signed a letter of intent, which expired, but Vertis expressed interest in continuing negotiations. At press time, neither company had ruled out completing the merger.
Despite losing out on Hopkins Printing, CGX remained undaunted in a quest to expand its geographic footprint. The company nailed down a pair of acquisitions—Pikes Peak Lithographing of Colorado Springs, CO, and Cyril Scott Co., Lancaster, OH.
Adobe took a painful hit in the public relations department with its ill-advised “send to FedEx Kinko’s” command in Acrobat 8.1. After meeting with printers, analysts and other interested parties, Adobe decided to remove it from the new version of Acrobat, but still make it an available option that was offered to FedEx Kinko’s customers.
In September, the Printing Impressions/RIT Printing Industry Hall of Fame opened its doors to four new inductees: the aforementioned Colville, Tim Poole of Dome Printing, Gary Samuels of Pictorial Offset, and David Torok of Padgett Printing. Gary Samuels’ brother, Donald, had previously been inducted into the Hall of Fame.
Bowne & Co. of New York decided to close its Milwaukee facility as part of a plan to integrate its manufacturing capabilities. The Milwaukee digital plant was integrated into Bowne’s South Bend, IN, operations.
Transcontinental Inc. strengthened its position in Canada with the acquisition of PLM Group of Toronto for C$130 million. PLM registered sales of C$126 million in 2006.
And, speaking of Transcontinental, Luc Desjardins left the top executive role in the hands of François Olivier, the son-in-law of Transcontinental founder Remi Marcoux. Under Desjardins’ guidance, Canada’s second largest printer grew from a market capitalization of C$653 million to C$1.8 billion.
NewPage agreed to plunk down $1.5 billion for Stora Enso’s paper manufacturing operations in North America. The deal also included a $200 million note and a 19.9 percent equity interest in the new company.
Ralf Sammek stepped down as president and CEO of KBA North America and was replaced by Holger Garbrecht. Sammek returned to Germany upon being promoted to executive vice president of worldwide sheetfed sales.
Quad/Graphics of Sussex, WI, and its insurance company won a $63 million judgment in a lawsuit resulting from the 2002 collapse of the printer’s racking system that caused a fire and killed one person. A jury found three manufacturers of Quad’s automated shelving system responsible to varying degrees for the collapse at its Lomira, WI, plant.
Nogales Investors, the private equity firm that owns Los Angeles-based Graphic Press, acquired Insync Media of Inglewood, CA, and merged the two companies together to create Insync Marketing Solutions.
As mills continued to reduce capacity, Wausau Paper said it would close its Groveton, NH, plant at year’s end, resulting in the loss of 300 jobs. This will slice Wausau production capacity by 28 percent. PI