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Commentary & Analysis

March 2014 – Deals, Court Filings & Closures in the Printing, Packaging, Paper & Related Industries

The traditional divide between commercial and packaging printers continues to blur as commercial printers seek opportunities in packaging where they can apply their talents, utilize their capital equipment investments, and transition to the packaging industry.

By Mark R. Hahn
Published: April 22, 2014

Significant transactions were announced throughout the spectrum of packaging technologies in March, from the basics - paper making for packaging products, to the sophisticated - global management of brand identity at multiple print providers across the globe, many using different printing technologies. The traditional divide between commercial and packaging printers continues to blur as commercial printers seek opportunities in packaging where they can apply their talents, utilize their capital equipment investments, and transition to the packaging industry where they view a brighter long term future in the business of putting ink on substrate.

One way to move into packaging is to buy your way in. Transcontinental did exactly that by acquiring flexible packaging printer Capri Packaging. Transcontinental has been seeking to diversify, due to the decline in demand for its primary products: magazines, newspapers, and books. As Transcontinental noted in its press release, it believes that the printing processes used in flexible packaging are similar to their existing competencies. Although the full details of the transaction were not made public, based on its stated goal to jump into flexible packaging, the acquisition looks like a smart deal for Transcontinental. As a kicker to the deal, the former owner of Capri Packaging, Schreiber Foods, which provides 75% of Capri’s total revenues, has committed to use the newly spun off Capri for the next ten years. Nice way to learn the business, albeit at what appears to be a steep price at 1.85 times revenues.

Strine Printing, in York, Pennsylvania, chose instead to evolve from its beginnings as a purely commercial printer, adding packaging and retail display expertise over the years. That transition was complete enough to attract the attention of Menasha Packaging. Headquartered in Neenah, Wisconsin, and with a sharp focus on retail packaging and display, Menasha announced that it has acquired Strine Printing. Measured by the number of employees, Menasha Packaging is approximately seven times the size of Strine, and has 11 manufacturing locations.

Schawk, the brand and image management company that rebranded itself as the less-than-memorable “SGK” has announced that it will be acquired by Matthews International and combined with Matthews’ brand management services. The combined company will provide brand management, pre-press services and imaging services for the primary packaging and corrugated industries. SGK also brings strengths in creative and conceptual services to the acquirer. In a rather quirky combination of businesses, Matthews’ other line of business is caskets, cremation equipment and cemetery products such as crypt plates.

There were several deals in the corrugated packaging segment. With backing from PE firm Monroe Capital, 127 Summit Holdings was formed and acquired Summit Container in Monument, Colorado as its platform company. In another deal with PE backing, Arbor Investments added to its portfolio of food and beverage related packaging companies with the acquisition of Pacific Northwest packaging printer Trojan Lithograph. Welch Packaging in Elkhart, Indiana acquired the assets of nearby Indiana Corrugated, bringing this privately held company to eight plants in the Midwest.

RockTenn, a $9.6 billion integrated manufacturer of corrugated packaging, acquired the Simpson Tacoma Kraft Company, producer of white linerboard which is used as the clean, printable outer surface of corrugated boxes. With this sale, it appears that Simpson has come full circle through three decades of acquiring, and now completely divesting, a collection of paper mills across the US. Once the largest producer of Text and Cover grades in the US, Simpson produced Starwhite Vicksburg, one of my favorite papers that I often specified for high end corporate communications. (Just remembering the name of that beautifully smooth and fine paper, “Starwhite Vicksburg,” evokes memories of early mornings and late nights working with pressman and graphic designers to achieve just the right color with that double-hit of super warm red… )

The other hot sector last month was community newspapers. Adams Publishing Group, HQ’ed in Minneapolis, opened the spring season with a triple header, acquiring three publishing groups from American Consolidated Media. All together, the three divisions include 34 print publications, digital media assets and printing facilities, spread out from the Midwest though Ohio and down to the Chesapeake area in Virginia.

In an apparent flurry of spring cleaning, closures and bankruptcies return in greater numbers to our deal log. Standard Register announced the closing of its Dayton Ohio facility which specialized in forms printing. Continuing the national trend of newspapers to consolidate printing in regionally centralized efficient facilities, The Independent in Marshall, Minnesota, announced it will no longer be so independent, transferring its print operations to the House of Print in Madelia, Minnesota.

The Dolan Company filed for Chapter 11 bankruptcy, along with 14 related companies. The 15 entities filed a motion for joint administration, combining the interests of business journals in 19 markets, as well as its litigation support companies such as Counsel Press. The company reportedly plans a prepackaged plan of reorganization in which Bayside Capital, the investment firm that now owns Dolan Company’s substantial debt, will emerge as the new majority owner.

View all activity for the month of March at The Target Report.

Mark Hahn is a Managing Director and Founder of Graphic Arts Advisors, a boutique strategic financial advisory and consulting firm focused exclusively on the printing, packaging and related industries. He assists company owners and management, as well as their lenders, investors and shareholders in the following areas: mergers & acquisitions, sale of business, strategic and financial advisory, capital structure & funding, financial analysis, interim & turnaround C-level management and business valuations. Mark is the author of The Target Report and is regularly published and quoted in printing industry trade and management journals. Mark can be reached at 973-588-7399 or mark@graphicartsadvisors.com.


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