Commentary & Analysis
May 2015 – Mergers, Acquisitions & Restructuring in the Printing, Packaging & Related Industries
De-evolution for eBooks Platform? – May 2015 M&A Activity, includes commercial printing, packaging, newspapers, and equipment.
By Mark R. Hahn
Published: June 12, 2015
ProQuest, the world-class provider of digital content to libraries and researchers announced its commitment to provide printed copies of books with its acquisition of Coutts Information Service from the global book distributor and on-demand printer, Ingram Content Group. As part of the deal, ProQuest will now deliver its content in “e and p” format through an ongoing relationship with Ingram.
ProQuest traces its history back to 1872, when R.R. Bowker launched Publishers Weekly. The company has evolved to become a mammoth repository and global provider of digital content: with over 90,000 qualified sources, 6 billion digital pages spanning six centuries, the world’s largest collection of academic dissertations and thesis, in excess of 20 million scanned pages of global, national, regional and specialty newspapers, more than 450,000 books, scores of scholarly journals, and unique digitized collections from the world’s great museums and libraries, as well as archives from organizations and other sources such as the Associated Press. The company provides this digitized content to libraries and serious corporate, government, academic, professional and other researchers through a variety of automated online search and document management platforms.
It’s clear that ProQuest is a great home and superbly well-suited strategic buyer for Coutts Information Services, which through its MyiLibrary and Oasis platforms offers access to more than 13 million print titles and over half a million ebook titles. However, in a nod to the more classic form of the book, ink-on-paper, ProQuest will also offer access to Ingram’s extensive inventory of printed books and the ability to order titles in printed form through Ingram’s on-demand print and delivery network. Maybe it’s not de-evolution after all, rather an enlightened co-evolution of “e and p” books.
Direct mail combined with variable data printing technology has proven to be an attractive recipe for acquisitions in the commercial printing segment. Chicago-based Vision Integrated Graphics announced the acquisition of direct marketing printer and lettershop Tobe Direct, resulting in a company with total revenues now in excess of $70 million. This is not a “tuck-in” transaction to rationalize overcapacity; Vision Integrated Graphics committed to retain Tobe’s location and all of its employees, and will now have four locations around Chicago.
DOME Print & Marketing Solutions is back on the deal log for the second month in a row, following up on its April acquisition of a wide format printer with the purchase in May of the assets of American Web. The acquired company, also located in Sacramento, California, brings a proprietary e-commerce software platform to DOME, along with other digital marketing services.
Kapstone Paper & Packaging, a $2.3 billion revenue producer of kraft paper, containerboard and corrugated packaging products, acquired Victory Packaging/Golden State Container. Victory, based in Houston, Texas, has more than 65 distribution facilities across the US. The acquisition strategically builds a more vertically integrated supplier of packaging products. Kapstone paid an eye-popping $615 million, 11.2 times Victory’s 2014 EBITDA of $55 million, plus contingent earnouts of $45 million, raising the price to an even 12 times EBITDA. Even in the event that the earnouts don’t pan out, and accounting for $100 million of realizable tax benefits, the multiple paid is still a very robust 9.4 times.
Green Bay Packaging, which acquired Great Lakes Packaging and Midland Container in October, 2014, was active again in May with its acquisition of Baird Display, printer and manufacturer of point-of-purchase retail marketing displays.
Consolidation continues unabated in the newspaper publishing segment, as publishers try to stay ahead of the ongoing downward spiral in subscription and advertising revenue. Chicago’s Tribune Publishing, itself only recently spun out of the Tribune Company last August in the great disgorgement spree of print media from major multi-platform companies (see The Target Reports June 2014 and July 2014), acquired the San Diego Union-Tribune and affiliated titles. Shortly after closing the deal, the company announced it was closing the acquired printing facility and moving production to its new sister newspaper, The Los Angeles Times, affirming another trend we have noted, the regionalization of newspaper production enabled by more efficient presses and driven by open capacity on those presses as run lengths and page counts decline.
Also on the west coast, a much smaller player in the newspaper roll-up trend, Metro Newspapers in San Jose, California acquired The Pacific Sun which serves the San Rafael area. The parent company now publishes eight papers with a combined weekly circulation of 190,000.
Swiss-based manufacturer of first-rate diecutting presses, the Bobst Group, acquired the Italian manufacturer of flexographic printing presses, Nuova Gidue, once again demonstrating the continued strength of the flexo printing process, especially in the packaging segment. Other recent deals have included Heidelberg’s acquisition of Gallus, the Swiss-based flexo press manufacturer, and KBA’s acquisition of Italy-based Flexotecnica.