Commentary & Analysis
Vistaprint Hits a Double with Global Acquisition Strategy – March 2015 M&A Activity
March 2015 –Mergers, Acquisitions & Restructuring in the Printing, Packaging & Related Industries.
By Mark R. Hahn
Published: April 13, 2015
Cimpress, parent company of the phenomenal Vistaprint, continued to expand its market into additional countries by acquiring web-to-print companies that serve those countries in their native language. The company moved into France early in March with its acquisition of Exagroup. In what appears to be a departure from Vistaprint’s primary strategy in the US of selling directly to small businesses, the acquired company exclusively serves clients through a network of resellers through its online platform and white-labeled web-based store fronts. Cimpress used this strategy last year to quickly establish an extensive customer base in Italy when it acquired Pixartprinting, a web-to-print company that also uses the reseller channel to reach its customers.
Cimpress kept running at full speed and secured a second deal in March, reaching southward from its home base in the Netherlands to acquire Austrian web-to-print company Druck.at. The acquired company in German-speaking Austria reaches its customers both through resellers and directly to small and medium business customers. Similar to its deal when it acquired the Brazilian company Printi in October 2014, Cimpress gains an immediate presence in the targeted country’s language, which I suspect is especially critical to successful market penetration when the product itself is the printed word.
For the French connection, Cimpress paid €91.5 million for a 70 percent interest in the company. Based on the reported trailing twelve months revenue of €76 million and €14 million EBITDA (18.4%), Cimpress paid 6.5 times EBITDA for its controlling interest, valuing the total shares of the company at €130.7 million or 9.3 times EBITDA. The sellers have the opportunity to increase the final payout subject to certain benchmarks set for 2017, which could increase the price to within spitting distance of a 10 times multiple. Cimpress will pay the sellers cash at closing.
The acquired Austrian company’s revenue were significantly less than their new French teammates, with trailing twelve months revenue reported at €34 million. EBITDA for the same period was €3.6 million (10.6%). As might be expected based on the lower revenues and EBITDA percentage, the purchase multiple was correspondingly lower, but still a very respectable 6.5 times EBITDA, structured as €20 million cash at closing plus €3.3 million paid in cash or stock in 2017.
Packaging power hitter CCL Industries acquired two specialty companies in Madison, Wisconsin, Meetings Direct and pc/nametag. The acquired companies, previously under common private ownership, provide specialty printing and supplies to meeting planners and promotional distributors. The companies will be bolted-on to Avery North America, which CCL acquired in 2013 and which provides pressure-sensitive papers used in the newly acquired product lines. The acquired companies have combined revenues of $36 million and achieved $6.3 million in EBITDA (17.5%). CCL Industries reportedly is paying $37 million for the companies, 5.9 times EBITDA, slightly more than one times revenue.
Sonoco, another player in the ongoing global roll-up of the packaging industries, announced the acquisition of Brazilian flexible packaging printer Graffo. The company prints prime labels for confectionary and other markets using rotogravure presses and lamination processes.
Esko, a division of conglomerate Danaher and supplier of prepress systems to the packaging industry, acquired MediaBeacon. The acquisition brings an established digital asset management software component to Esko which claims that 90% of all retail packages in some way are processed through its software.
Diversified Printing & Document Management
Standard Register filed for Chapter 11 bankruptcy, pinning much of the blame for its situation on the debt it incurred when it acquired print management company Workflow One in 2013. Additional and even more substantial debt is due in unfunded pension liabilities. The company walked into court with a reorganization plan and buyer ready to go. The buyer, Silver Point Capital, is also a current shareholder, lender, and now the stalking horse buyer in the court-supervised sale process. Private investment firm Silver Point Capital has indicated that it plans to credit bid a significant portion of the purchase price. The fund has provided interim financing to fund ongoing operations. All indications are that the company will continue operating and is likely to emerge from bankruptcy in much better shape.
Edison Litho & Printing, a New Jersey-based printer known for large format offset printing, has acquired the Compass Display Group, a retail display company in Kennesaw, Georgia. In another deal focused on the retail graphic environment, California-based Federal Heath acquired DuraColor in Racine, Wisconsin.
FLM Graphics, a diversified commercial printer in Fairfield, New Jersey, announced that it was merging with another New Jersey firm, Paravista. The combined firms will operate out of FLM’s Fairfield facilty. In another announced merger, Teagle & Little of Norfolk, Virginia, will combine with AmeriComm. The combined companies are re-branding under the new banner, Centric Communications.
The FutureMark paper mill in Manistique, Michigan, closed in March. The mill was rescued in 2011 by the state with a loan that enabled its exit from bankruptcy at that time. The new owners were unable to secure adequate financing to keep the mill operating. The closure follows a spate of mill closings announced over the past year as the paper industry continues to adjust to declining demand for printing paper grades.