De-evolution for eBooks Platform? – May 2015 M&A Activity
DOME Print & Marketing Solutions is back on the deal log for the second month in a row, following up on its April acquisition of a wide format printer with the purchase in May of the assets of American Web. The acquired company, also located in Sacramento, California, brings a proprietary e-commerce software platform to DOME, along with other digital marketing services.
Kapstone Paper & Packaging, a $2.3 billion revenue producer of kraft paper, containerboard and corrugated packaging products, acquired Victory Packaging/Golden State Container. Victory, based in Houston, Texas, has more than 65 distribution facilities across the US. The acquisition strategically builds a more vertically integrated supplier of packaging products. Kapstone paid an eye-popping $615 million, 11.2 times Victory’s 2014 EBITDA of $55 million, plus contingent earnouts of $45 million, raising the price to an even 12 times EBITDA. Even in the event that the earnouts don’t pan out, and accounting for $100 million of realizable tax benefits, the multiple paid is still a very robust 9.4 times.
Green Bay Packaging, which acquired Great Lakes Packaging and Midland Container in October, 2014, was active again in May with its acquisition of Baird Display, printer and manufacturer of point-of-purchase retail marketing displays.
Consolidation continues unabated in the newspaper publishing segment, as publishers try to stay ahead of the ongoing downward spiral in subscription and advertising revenue. Chicago’s Tribune Publishing, itself only recently spun out of the Tribune Company last August in the great disgorgement spree of print media from major multi-platform companies (see The Target Reports June 2014 and July 2014), acquired the San Diego Union-Tribune and affiliated titles. Shortly after closing the deal, the company announced it was closing the acquired printing facility and moving production to its new sister newspaper, The Los Angeles Times, affirming another trend we have noted, the regionalization of newspaper production enabled by more efficient presses and driven by open capacity on those presses as run lengths and page counts decline.