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The Box is in Demand - October 2015 Mergers, Acquisitions & Restructuring in the Printing, Packaging & Related Industries

The Box is in – paperboard, corrugated, decorated, foil-stamped, bar-coded, laminated, textured, embossed, pearlized, diecut, folded, glued, large and small. Folks in the business of printing love the box. Unlike the box’s troubled cousin, commercial printing, the box is reordered on a regular basis and is far less subject to disruption by online internet-based technologies.

By Mark R. Hahn
Published: November 9, 2015

The Box is in – paperboard, corrugated, decorated, foil-stamped, bar-coded, laminated, textured, embossed, pearlized, diecut, folded, glued, large and small. Folks in the business of printing love the box. Unlike the box’s troubled cousin, commercial printing, the box is reordered on a regular basis and is far less subject to disruption by online internet-based technologies.

Graphic Packaging International announced the acquisition of Carded Graphics, a Virginia-based printer of folding cartons used to package food, craft beers and other consumer products. The company utilizes two traditional offset printing presses and diecutting technologies. The acquired company, Carded Graphics, is clearly a small catch relative to the buyer, which has revenues in excess of four billion dollars. Nonetheless, regardless of the relative small size of the acquisition, the transaction is consistent with the company’s clearly articulated strategic plan to focus on the production of folding cartons. Graphic Packaging also announced in October that it was expanding into the Mexican market for folding cartons with the acquisition of G-Box. The acquired company prints and manufactures folding cartons and corrugated boxes.

As reported over the past four years in The Target Report, Graphic Packaging has been consistently executing on its folding carton strategy. In December 2014, the company acquired Toronto-based Norampac from Cascades, adding three Canadian folding carton plants as well as a two paperboard mills, thus integrating raw material production into its folding carton business. Previous expansion of its international footprint in folding carton production includes the company’s acquisition of the UK-based companies Benson Group and Contego Cartons, in 2014 and 2012 respectively, having also added the Netherlands-based A&R Cartons in 2012.

In alignment with its strategic plan, Graphic Packaging has divested assets unrelated to its core focus on folding cartons. The company sold its multi-wall bag and kraft business to the Mondi Group and its Di-Na-Ca Label Group to Multi-Color Corporation, both transactions completed in 2014.

Another very active rollup play in the packaging industry, Multi Packaging Solutions, is also focused on the box, obtaining the majority of its revenue from the folding carton segment. Backed by private equity firms The Carlyle Group and Madison Dearborn Partners, Multi Packaging Solutions, became a publically traded company in October. Among its stated objectives in its prospectus is the acquisition of additional packaging companies. The company has appeared in our deal log no less than seven times over the past four years, most notably when it acquired AGI-Shorewood in 2014 2013 (see The Target Report – November 2014) and Chesapeake Services in 2013 (see The Target Report – November 2013).

Electronics for Imaging (EFI), the dominant company providing MIS systems to the printing and related industries, expressed its love for the simple box with its acquisition of Corrugated Technologies. The acquired company, based in San Diego, California, provides manufacturing and management information software to the corrugated packaging market.

Commercial Printing

M&A activity in the commercial printing segment remained spookily quiet in October, as it has been for several months, despite expectations that consolidation activity will be brisk in the commercial printing segment. What we see instead is that the recent uptick in commercial printing business activity, however modest, is providing some breathing room and profits for company owners that are happy to chug along, hoping that the slightly rising tide, combined with reduced competition courtesy of the great recession, will bring back the happy times.

A select few, however, in the commercial printing segment, are in the market, not consolidating, but rather making strategic acquisitions that broaden their portfolio of services. Dome Printing in Sacramento, California, acquired Bel Aire Displays, expanding the company’s geographic footprint and furthering its strategic goal to grow its presence in the market for in-store and out-of-home retail displays. Earlier this year, Dome acquired wide format printer and retail display company Color Solutions.

Drummond Press, based in Jacksonville, Florida, announced its second acquisition in Atlanta, Georgia, acquiring the print division of RGI. The digital printing operation is focused on data driven marketing programs and lead generation programs.

Book Printing

Bang Printing in Brainerd, Minnesota, acquired Sentinel Printing in St. Cloud, Minnesota. With extensive in-house binding capabilities, Bang focuses on the short and mid-run book manufacturing market. Similar to previous acquisitions by Bang of Hess Print Solutions in Ohio (see The Target Report – May 2013)and Victor Graphics in Maryland, this latest addition increases the company’s presence in the book printing segment.

Visant continued its ongoing exit from print-related businesses in its portfolio, selling yearbook company Jostens to consumer products conglomerate Jarden. Earlier this year, Visant sold book printer Phoenix Color (see The Target Report – July 2015) and in 2014 Visant divested its interest in direct mail printer Lehigh Direct which was acquired by SG360. Visant retains its school-branded apparel and awards, and is now fully divested of print assets.

View the complete M&A report for October 2015

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.

 

Discussion

By James Evans on Nov 10, 2015

No mention about the two large plant closures by Quad? Well, I guess it did happen in November, but I haven't seen it mentioned anywhere on WhatTheyThink.

 

By Eric Vessels on Nov 11, 2015

@James, the plant closures in Augusta and East Greenville were mentioned in the Q3 & YTD news published on November 4th:

http://whattheythink.com/news/76272-quadgraphics-reports-q3-ytd-results/

 

By James Evans on Nov 11, 2015

Ah, they snuck that one past me! Thanks Eric.

 

By Adam Dewitz on Nov 11, 2015

@James, QG has not formally announced the plant closures in a press release. That announcement was on the earnings call with investors.

 

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