Commentary & Analysis
Rollin’ Rollin’ Rollin’ - November 2015 M&A Activity
Saugatuck Capital bolts Plymouth Printing onto Pharmaceutic Litho & Label, Rondo-Pak adds Contemporary Graphics to US pharma printing platform, Firespring evolves into MSP, Circle Graphics corrals grand format printer Imagic, the Mittera Group continues traditional printing rollup.
By Mark R. Hahn
Published: December 10, 2015
Rawhide... by The Blues Brothers (click here for the song while reading)
Call it a roll-up; strategic add-ons, or platform bolt-ons – by any name you give it, M&A activity is brisk as companies build specialty printing companies with scale and geographic diversity. In the packaging segment, Pharmaceutic Litho & Label, a California-based insert and label printing company, acquired east-coast Plymouth Printing. With plants in New Jersey and North Carolina, the acquired company has been laser-focused on the pharmaceutical insert and label market for almost 90 years. As a portfolio company of Saugatuck Capital since October 2014 (see The Target Report – October 2014, the Pharmaceutic platform has now established a stake in the competitive territory for pharmaceutical inserts and labels. With the additional backing and participation of mezzanine fund Ironwood Capital, we won’t be surprised to see Saugatuck continue to roll this one up.
Rondo-Pak, a subsidiary of Swiss conglomerate Körber and much larger player in the same niche market segment, merged with New Jersey printer Contemporary Graphics. The newly formed US division will carry the Rondo-Pak name and combines Rondo’s existing US and Puerto Rico operations and brings pharmaceutical folding cartons into the mix for Contemporary’s existing customer base.
Marketing Services (MSP’s)
Commercial printers have struggled to redefine themselves as more than just another print shop hungrily hoping to successfully bid on and win their next order. Many have migrated into the middle ground between being a printer or an advertising agency, finding themselves in the loosely defined territory of “marketing service providers,” also known as MSP’s. The trail on the way to being a true MSP is littered with companies that have failed to execute, only having succeeded in re-branding themselves with a new name, but failing to develop real differentiation or a well-defined and defensible position in the market.
Firespring, based in Lincoln, Nebraska, is a company that appears to have successfully navigated the journey, using a roll-up strategy to morph several small printing, mailing, marketing and design companies into a cohesive MSP. The company recently announced the acquisition of the latest target, the purchase of On-Time Marketing. This follows the company’s roll-up of five companies all at the same time in July 2015.
Grand & Wide Format Printing
Circle Graphics, headquartered in Longmont, Colorado, continues to add companies in its chosen territory, wide format and grand format printing, with its latest acquisition, the purchase of Imagic in Burbank, California. Bolstered by this acquisition, the company now claims to be the world’s largest producer of grand-format digital graphics. Using acquisitions to expand its geographic footprint, previous transactions include the purchase of the Art Division of Café Press in Raleigh, North Carolina earlier this year and the acquisition in 2014 of Mammoth Media in Boston.
One of the most active consolidators in recent years is the Mittera Group headquartered in Des Moines, Iowa. The company is apparently very happy to pursue the traditional roll-up strategy of acquiring good old fashioned printing companies that churn out millions of inserts, brochures, mailers and other printed products. While not eschewing the need to suggest that they support alternative communication channels, the company clearly believes in the value and endurance of print as its core product. The latest addition to the Mittera family is Pioneer Graphics which will be rolled into Mittera’s Colorfx facility in Waverly, Iowa. All told, Mittera and its subsidiary Colorfx have appeared on our deal log six times since we started reporting M&A deals in the printing and related industries in 2011. Previous acquisitions include the purchase of J.B Kenehan in October 2014 and Wisconsin Web Offset in October 2013 (see The Target Report – October 2013). As we asked our readers in that same month, when RR Donnelley announced its acquisition of Consolidated Graphics, will Mittera begin to take the place vacated when Consolidated was absorbed into RRD? The question remains: will Mittera break out of its Midwest region and become a national player?
Printing Management Information Systems (MIS)
It’s hard to write about roll-ups in the printing industry without bringing EFI into the conversation. The company continued its 12-year long buying spree of printing MIS systems, acquiring UK-based Shuttleworth Business Systems. Excluding EFI’s acquisitions of printing-related equipment, such as the recent moves into textile printing with the purchase of Reggiani Macchine (see The Target Report – July 2015), we count no less than 14 acquisitions on our deal log (now four years) of printing and packaging MIS systems and/or related web-to-print software. It sure feels like a long and winding trail from when PrintCafe surprised the printing industry in the midst of the late 90’s dotcom craze. PrintCafe, acquired by EFI in 2003, was itself a roll-up; the founders rounded up those first few print MIS systems, including Programmed Solutions (PSI), the MIS system I had purchased for my printing company. During the interim years, EFI has ceased developing the PSI system, and others as well, as the roll-up of printing industry MIS software systems keeps on rollin’ rollin’ rollin’…