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Forbes Lands the Whale – July 2014 M&A Activity

Forbes achieves stunning price in sale to Asian investment group, Scripps and Journal Communications merge and immediately spin off all their printed publications, commercial printer SG360° buys Lehigh Direct from Visant, and more - July 2014 –Mergers, Acquisitions & Restructuring in the Printing, Packaging & Related Industries

By Mark R. Hahn
Published: August 12, 2014

Forbes landed the big fish, achieving an estimated $475 million sale price, after much skepticism that the company could find a buyer that was willing to ante up the $400 million that the company was seeking. The buyer, a Hong Kong-based investor group improbably named Integrated Whale Media Investments, apparently wanted to make sure that this one did not get away. According to Forbes’ own projections that were prepared for prospective buyers and circulated earlier this year, the company estimated that revenues in 2013 would wrap up at $144.6 million with EBITDA of $20.8 million. If true, the reported purchase price represents a whopping multiple of 22.8 times cash flow and more than 325% of trailing revenues. Clearly the global cachet of the Forbes brand was the value driver in this deal, and the price is stunning in comparison to the paltry multiples paid for most publishing companies in recent years. Since the exact terms of the deal are private, maybe it’s all one big fish story…

The newspaper publishing business continues to roil as the major players divest their print-centric operations in favor of other media. E.W. Scripps Company in Cincinnati merged with Milwaukee-based Journal Communications to form a combined broadcasting group with TV and radio stations in 27 markets that reach 18 percent of US homes. The newspaper operations of the two companies were simultaneously jettisoned to form a new company, Journal Media Group, which will publish newspapers in 14 markets. This deal follows on the heels of last month’s spinoff of Time-Warner’s printed publications; last year’s split of Rupert Murdoch’s News Corp. from 21st Century Fox; the just completed spinoff of the Tribune’s newspapers; and the announcement days later that Gannett was splitting in two. The major urban dailies appear to be mere boat anchors holding back the value that can be harvested from media companies when the printed product is thrown overboard.

The smaller fish in the pond, regional newspapers, were actively regrouping and forming new schools of thought. Gatehouse Media purchased the Providence Journal from A.H. Belo, the publisher of two newspapers in Texas that paid handsomely several years ago to enter the New England market. Gatehouse media, which itself was restructured last year in bankruptcy and is now owned by New Media Investment Group, owns and publishes over 450 community publications. Adams Publishing Group, which acquired 34 titles in March, was back in the market, and purchased the assets of Huckle Media in Minnesota, adding 10 more community newspapers to its portfolio. NYC Community Media purchased the Community Newspaper Group which publishes 11 community and special interest newspapers that serve subsets of the larger New York City market. In upstate New York, publisher and printer The Scotsman Media Group, which had announced a management buyout in January, was unable to secure financing and closed its printing operations in two locations.

As we noted earlier this year, consolidation and change continues to affect the business of printing and mailing transactional documents. OSG Billing Services, headquartered in New Jersey, purchased SouthData in Mount Airy, South Carolina. Cathedral Corp in Rome, New York acquired transactional printer AXIS Data Solutions located in Orlando, Florida. In response the same factors driving this trend towards consolidation among transactional printers, Fidelity Investments, the huge financial services company, announced it is closing its own printing and mailing operations in Kentucky and Texas.

Private equity is playing a significant role in the ongoing reduction and rationalization of capacity in the paper manufacturing industry. Peak Rock Capital’s portfolio company, Atlas Paper Mills, acquired a source of recycled fiber for its paper, Accurate Paper Recycling, located in Tampa, Florida. FiberMark, a portfolio company of American Securities, acquired Crocker Technical Papers in Fitchburg, Massachusetts. H.I.G Capital backed a management buyout of Cascades Fine Papers Group, and is bringing back the Rolland brand name, the division’s name before the business was acquired by Cascade. Another Cascade location, the Kraft paper mill in Kingsey Falls, Quebec, was not so lucky and will be permanently closed, ending Cascade’s production of Kraft products. A small mill in eastern Connecticut, Fusion Paperboard, was also unable to economically sustain production and closed.

In the commercial printing segment, SG360° headquartered in Wheeling, Illinois, acquired direct mail printer Lehigh Direct from Visant. SG360° reported that the deal brings its revenues to more than $300 million, and that the combined entity will mail over two billion pieces of mail annually.

View the complete M&A report for July

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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