Commentary & Analysis
Who Says Books Aren’t Pretty? – February 2015 M&A Activity
Books were ascendant in the printing deal space as RR Donnelley swooped down and snatched Courier Corporation right out of the arms of Courier’s suitor of choice, Quad/Graphics. Almost two and half times larger than Quad, RRD was not about to let this opportunity escape as it did last year when Quad acquired Brown Printing in a sweetheart of a deal.
By Mark R. Hahn
Published: March 13, 2015
Books were ascendant in the printing deal space as RR Donnelley swooped down and snatched Courier Corporation right out of the arms of Courier’s suitor of choice, Quad/Graphics. Almost two and half times larger than Quad, RRD was not about to let this opportunity escape as it did last year when Quad acquired Brown Printing in a sweetheart of a deal. You can imagine the command issued from RRD’s executive suite, “do not let this one get away!” When the dust settled, RRD offered to assume all the debt of the bride-to-be, worth an additional $40 million more than Quad’s offer. Once spurned, Quad reportedly did not fight back.
With sales of $228 million, Courier represents an increase of only 2% in revenues for RRD, but as the traditional segments of the industry consolidate, there are fewer acquisition candidates that can move the needle for the largest players. In addition to traditional book printing, Courier brings other assets to the RRD family, including digital printing capabilities and on-demand solutions that extend the economic lifecycle of published titles. With its Dover and REA publishing brands, Courier owns over 10,000 titles, serving religious, trade and educational markets. The bride is not only pretty, she has intellectual content.
Since the engagement agreement with Quad included a break-up clause, the company did not go away without some reward for its trouble – RRD will be paying Quad the $10 million pre-nuptial fee that Courier owes for walking away from the alter. In any event, Quad recovered its composure quickly and picked up Paris-based Marin’s International, a global player in retail display.
More about Books
Recently rebranded commercial printer, Ironmark (née Frank Gumpert Printing) acquired United Book Press in nearby Woodlawn, Maryland. The acquired company will be maintained as a separate book printing division, adding $13 million in revenue to Ironmark’s $22 million.
Harman Press, a North Hollywood, California printer that touts its unionized work force to pitch entertainment and political clients, acquired A&I Photographic and Digital. The acquired company has evolved from a specialized photo processor to printer of fashion and entertainment portfolios and digital books.
Bookseller Family Christian, LLC filed for Chapter 11 bankruptcy, planning to sell itself in a 363 sale. A new subsidiary of its parent non-profit organization is the lead bidder acting as the stalking horse in the court supervised sales process. The company plans to maintain all 266 stores operating in 36 states with over 4,000 employees.
Commercial Printing & Copying
Staples announced its planned merger with Office Depot which itself recently acquired OfficeMax. The companies offer printing and copying services, both in-store and online. With their printing service offerings, the giant companies compete with thousands of small quick printers, all vying to capture the same walk-in print and copy business. As Staples continues to close stores and drive its customers to purchase office supplies online, its ability to successfully compete for copy business remains unclear.
At the opposite end of the size spectrum from Staples, KM Media Group, a collection of acquired companies competing in the general commercial segment, acquired One Source Solutions. One Source Solutions, formerly a Sir Speedy Printing franchise, will close its Newark, New Jersey location and tuck its business into KM’s Clifton, New Jersey location.
Commercial printer Allied Group in Cranston, Rhode Island acquired DES Printing. Allied has used a steady acquisition strategy, completing seven deals since 2000, to grow its business to $20 million revenue.
In Carlstadt, New Jersey, Pictorial Offset announced that it was closing after 78 years. At one time a formidable competitor in the market for high-end commercial printing, Pictorial has been unable to fully recover since the plant was flooded in 2012’s Superstorm Sandy. In a picture complicated by claims against the printer’s insurance company, the company was further challenged when its lender filed suit in December in an effort to collect an outstanding line of credit.
Private Equity firm Lindsay Goldberg created and funded Crown Paper Group as a holding company to acquire Port Townsend Holdings Company. The transaction included the Port Townsend Paper mill in Port Townsend, Washington, the Crown Packaging and Boxmaster plants in Vancouver, British Columbia, as well as two Canadian distribution centers. The Port Townsend mill produces Kraft and containerboard grades used in the company’s packaging plants.
The roll-up in the printing papers distribution segment continues. In its eighth acquisition of a regional paper merchant since 2010, Central National-Gottesman acquired Spicers Canada. Formerly owned by an Australian company, Spicers has 15 distribution and sheeting facilities throughout Canada.
Popular Ink, a flexible packaging printer in McKinney, Texas was acquired by Dallas-based private equity firm Highlander Partners. The two founders are retaining a portion of equity in the company and will be working with the new owners to grow the company; presumably able to take a “second bite of the apple” when the company reaches the next stage in its development.