Transition to Digital Printing Roils the Book Industry – July 2013 M&A Activity
Transactions in the book printing industry took center stage in July; the headline act was the Chapter 11 bankruptcy filing of Cengage Learning. The company is now moving rapidly to a digital strategy, as it seeks to shed more than $4 billion in debt through the bankruptcy process. CEO Michael Hansen, as reported by Bloomberg, squarely placed the blame on the company itself for not adopting digital quickly enough, due to the “belief that the print model would hold up better than it actually did.”
Private equity firm Castle Harlan increased its position in the book printing industry with its investment in Bookmasters, which has expertise in digital book printing. The deal was announced as a strategic partnership between Bookmasters and Castle Harlan’s existing portfolio company, Baker & Taylor, the world’s largest distributor of books and related materials. The two companies will continue to operate independent of each other.
Edward Brothers Malloy, formed in February 2012 with the merger of two book manufacturing companies, announced the closure of one of its two printing facilities in Ann Arbor, MI. John Edwards, CEO of the company, attributed the closure to a significant decline in the demand for longer runs which utilized the offset printing process. He also noted that the closure is consistent with the company’s strategic effort to grow its digital book printing business. The company is capable of the “distribute-then-print” model of content delivery, using its several remote digital printing facilities in the US, as well as its one facility in the UK.
Bucking the trend toward digital book printing, Publisher’s Graphics, an innovator in internet-based ordering and online sales of digitally printed books, acquired Corley Printing, a traditional offset book printer with capability to produce longer runs printed on offset presses.
Consolidation was once again the main act in the packaging industry, with an assist by private equity. Chicago PE firm Svoboda Capital Partners was back in the market. Svoboda acquired TVC Label and “bolted” the company onto its platform company, M.E.I. Labels, which it acquired in December 2012. Madison Dearborn Partners, also of Chicago, announced that it agreed to buy Multi Packaging Solutions from Irving Place Capital, preparing Multi Packaging Solutions for a second act in its growth from inception in 2005 to global player in the packaging industry. Back on the deal log for the third time in less than two years, publically traded Multi-Color Corporation acquired Flexo Print, a label printer in Guadalajara, Mexico.
Clarence Schawk, founder of the global image management company, once told me that he “did not want to own iron,” rather he preferred to remain firmly on the image and brand management side of the graphics business. True to this vision, Schawk, now rebranded at the corporate level as SGK, stuck to its script, selling its large format printing facility in Los Angeles, California. On the buy side of the transaction, and clearly articulating the opposite strategy, dedicated to being a technology-driven company, The Garvey Group purchased Schawk’s Los Angeles large format facility. Garvey is truly a company that likes the heavy iron, announcing last month that it bought a six-color UV-capable 64” offset press, the eighth KBA press in its troupe of oversize offset presses.
Ricoh purchased a minority interest in Avanti, one of the few remaining independent providers of printing management information systems (MIS). One day later, Hewlett-Packard announced that it was closing Hiflex, the print MIS system it purchased last year. Meanwhile, Electronics for Imaging (EFI) continues to dominate the print MIS business, having acquired and then discontinued numerous competitors. Will Ricoh succeed where HP failed?
The print management business (aka purchase aggregation and/or print outsourcing) was active in July. Innerworkings announced the acquisition of EyeLevel, a company which produces retail displays and fixtures in the Czech Republic. This follows the company’s acquisition last month of a packaging design and sourcing company in the UK. Another player in the print management space, Pitney Bowes, is bowing out of the business, selling its PB Management Services unit to Apollo Global Management. Apollo is the huge investment firm that proclaims its expertise to be contrarian, value-oriented investing, with significant distressed expertise. The print management business is changing – are these transactions signals that the overcapacity in the offset printing business might be lessening, possibly mitigating the advantages that endemic overcapacity afforded the print management firms? More on this topic to come in August!
July was another busy month for transactions in the printing and related industries – see the deal logs below for complete details and links to source articles.
2013 July - 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 |
|||
Innerworkings | $813.5 | Chicago, IL | EyeLevel | No Data | Prague, Czech Republic |
7/31/13 | No Data | Acquisition | Retail displays & fixtures | Link | |||
Apollo Global Management | No Data | New York, NY | Pitney Bowes Management Services |
$4,840 | Stamford, CT | 7/31/13 | $400.0 | Acquisition | Print management | Link | |||
The Printing Co. | No Data | Cape Girardeau, MO | Steven Brothers Printing | No Data | Park Hills, MO | 7/30/13 | No Data | Merger | Printing & copying | Link | |||
Spartanics | No Data | Rolling Meadows, IL | Malahide | No Data | Vancouver, BC | 7/29/13 | No Data | Acquisition | Hot stamping presses | Link | |||
Deluxe Corporation | $1,530 | Shoreview, MN | Vertical Response | No Data | San Francisco, CA | 7/25/13 | $27.0 | Acquisition | Email marketing service | Link | |||
M.E.I. Labels | No Data | Catoosa, OK | TVC Label / TVC One | No Data | Lewisville, TX | 7/24/13 | No Data | Asset purchase | Labels & packaging | Link | |||
Multi-Color Corporation | $660.0 | Cincinnati, OH | Flexo Print | $30.0 | Guadalajara, Mexico | 7/24/13 | No Data | Acquisition | Product labels | Link | |||
Alliance Printing and Imaging | No Data | Roswell, GA | Stroud's Southern Printing | No Data | Roswell, GA | 7/23/13 | No Data | Employee buyout | Printing & copying | Link | |||
Millcraft Paper Company | No Data | Cleveland, OH | Lindenmeyr Munroe, Ariva, Midwest Ops |
No Data | Purchase, NY | 7/22/13 | No Data | Acquisition | Paper distribution | Link | |||
Central National-Gottesman (Lindenmeyr Munroe) |
No Data | Purchase, NY | Domtar, Ariva Division, US Ops | $5,370 | Covington, KY | 7/22/13 | No Data | Acquisition | Paper distribution | Link | |||
Sandy Alexander Mngt Team | No Data | Clifton, NJ | Sandy Alexander | No Data | Clifton, NJ | 7/22/13 | No Data | Management Buyout | Commercial printing | Link | |||
Bencis Capital Partners | No Data | Amsterdam, Netherlands |
Xeikon | € 130.2 | Brieversstraat, Netherlands |
7/18/13 | € 110.3 | Stock purchase (65.7%) |
Digital printing equipment | Link | |||
Modern Litho | No Data | Jefferson City, MO | Midtown Printing | No Data | St. Louis, MO | 7/17/13 | No Data | Merger | Commercial printing | Link | |||
Ricoh | ¥1,924 | Tokyo, Japan | Avanti | No Data | Toronto, ON | 7/11/13 | No Data | Minority interest | Print MIS system | Link | |||
Direct FX | No Data | Memphis, TN | Quality DPM (Now Direct FX Mississippi) |
No Data | Southaven, MS | 7/10/13 | No Data | Acquisition | Commercial printing | Link | |||
Castle Harlan | No Data | New York, NY | Bookmasters | No Data | Ashland, OH | 7/10/13 | No Data | Acquisition | Book printing & services | Link | |||
Madison Dearborn Partners | No Data | Chicago, IL | Multi Packaging Solutions | No Data | New York, NY | 7/8/13 | No Data | Acquisition (BoA/ML & Barclays) |
Packaging, labels & inserts | Link | |||
Garvey Group (Garvey Group West) |
No Data | Niles, IL | Schawk (SGK) Large format facility |
$459.0 | Des Plaines, IL | 7/8/13 | 10.2 (+liabilities) |
Asset purchase | Large format printing | Link | |||
Atlas Die | No Data | Elkhart, IN | Bernal | No Data | Rochester Hills, MI | 7/8/13 | No Data | Acquisition | Converting dies | Link | |||
Ennis | $533.5 | Midlothian, TX | Duffie Graphics | No Data | Danville, VA | 7/5/13 | No Data | Asset purchase | Forms & promo products | Link | |||
Publishers' Graphics | No Data | Carol Stream, IL | Corley Printing | No Data | Earth City, MO | 7/2/13 | No Data | Acquisition | Book printing | Link | |||
Arbor Investments | No Data | Chicago, IL | Keyes Packaging Group | No Data | Wenatchee, WA | 7/1/13 | No Data | Acquisition | Fiber trays and printed wraps | Link | |||
BRP Company | No Data | Blue Ridge Printing | No Data | Asheville, NC | 7/1/13 | $1.0 | Acquisition | Commercial printing | Link | ||||
Ennis | $533.5 | Midlothian, TX | Goodwin Graphics | No Data | Carrollton, TX | 7/1/13 | No Data | Asset purchase | Forms & promo products | Link | |||
2013 July - Bankruptcy Filings in the Printing, Packaging, Paper & Related Industries | ||||||||||||
Filing Party |
Date Case Filed |
Pre-Petition Revenues ($Mil ) |
Case # |
Filing Party Address |
Circuit |
Region & City |
Judge |
Attorney for Debtor |
Notes |
|||
Chapter 11 Filings: | ||||||||||||
Transprint USA, Inc. | 7/10/13 | No Data | 13-27698 | Harrisonburg, VA | 9th | Central CA Los Angeles |
Vincent P. Zurzolo | Margreta M Morgulas | Heat transfer paper & supplies | |||
Colorep, Inc. | 7/10/13 | No Data | 13-27689 | Rancho Cucamonga, CA | 9th | Central CA Los Angeles |
Julia W. Brand | Margreta M Morgulas | Heat transfer paper & supplies | |||
Johnston Lithograph, Inc. | 7/8/13 | No Data | 13-53213 | Romulus, MI | 6th | Eastern MI Detroit |
Marci B McIvor | Afan Bapacker | Commercial printing | |||
Cengage (AKA Thomson Learning, et al) |
7/2/13 | $1,992 | 13-44106 | Fairfield, CT | 2nd | Eastern NY Brooklyn |
Elizabeth S. Stong | Jonathan Henes | Textbook publisher | |||
Chapter 7 Filings: | ||||||||||||
EZ Screen Printing, LLC | 7/10/13 | No Data | 13-26147 | Miami, FL | 11th | Southern FL Miami |
A. Jay Cristol | Timothy S. Kingcade | Screen printing equipment | |||
Hooker-Ballew Printing Company | 7/1/13 | No Data | 13-33387 | Plano, TX | 5th | Northern TX Dallas |
Harlin DeWayne Hale | Reedy Macque Spigner, Jr. | Commercial printing | |||
2013 July - Non-Bankruptcy Closures in the Printing, Packaging, Paper & Related Industries | |||||||||||
Closed Company / Facility |
Date of Closure | Pre-Closure Revenues ($Mil ) |
Closing Address |
Related Party |
Related Party |
Date Closure Public |
Notes |
Press Releases |
|||
Hiflex MIS Systems | Jul-13 | No Data | Ashland, NY (NA Offices) |
Hewlett-Packard (HP) | Palo Alto, CA | 7/12/13 | Printing MIS software | Link | |||
Hess Print Solutions | Aug-13 | No Data | Woodstock, IL | Bang Printing | Brainerd, MN | 7/30/13 | Plant closed after 363 sale to Bang Printing | Link | |||
Edward Brothers Malloy - Printing Facility | Jan-14 | No Data | Ann Arbor, MI | Edward Brothers Malloy | Ann Arbor, MI | 7/30/13 | Consolidation of book printing ops | Link | |||