Mergers & Acquisitions

Packaging Corporation of America (PCA) entered an agreement to acquire all outstanding common shares of Boise Inc. for an aggregate transaction value of US$1.995 billion. The move will increase PCA’s containerboard capacity by 42 percent.

The $2 billion transaction (all dollar figures are in U.S. currency) includes PCA taking on $714 million of Boise’s outstanding debt. The deal is expected to close in PCA’s fourth quarter of 2013, subject to regulatory approvals.

The combined companies generated $5.5 billion in sales and $879 million in EBITDA (excluding special items) in the last 12 months ended June 30, 2013. The combined packaging business generated 75 percent of sales and 83 percent of EBITDA over the period, with the remainder generated by Boise's paper business.

PCA's containerboard capacity will increase to 3.7 million tons from its current level of 2.6 million tons (a 42 percent increase), including the announced expansion of paper machine number 2 (D2) at Boise's DeRidder mill. PCA's corrugated products volume will increase by about 30 percent as a result of the acquisition. The move will also increase PCA's market presence into the Pacific Northwest.

“The acquisition is an excellent fit, both geographically and strategically, with unique and substantial synergies,” said Paul Stecko, Executive Chairman of PCA. “It provides the containerboard that PCA needs to support our strong corrugated products growth. The DeRidder containerboard mill is low cost, located in a very good wood basket and, after the D2 machine conversion, provides almost one million tons of primarily lightweight containerboard.”

PCA, headquartered in Lake Forest, Illinois, is the fourth largest producer of containerboard and corrugated packaging products in the United States with sales of $2.8 billion in 2012. PCA operates four paper mills and 71 corrugated product plants in 26 states across the country.

The boards of directors of both Boise and PCA have unanimously approved the agreement. Boise's board of directors expects to recommend that shareholders tender their shares into the offer once it is launched. The tender offer is required to be commenced within 10 calendar days and to remain open for at least 20 business days after launch. Any shares not tendered in the offer will be acquired in a second step merger at the same cash price as in the tender offer.

Boise Inc., headquartered in Boise, Idaho, manufactures a variety of packaging and paper products. Boise’s range of packaging products includes linerboard and corrugating medium, corrugated containers and sheets, and protective packaging products. Boise’s paper products include imaging papers for the office and home, printing and converting papers, and papers used in packaging, such as label and release papers.

Esko of Ghent, Belgium, has moved to purchase CAPE Systems, which develops software for packaging design, pallet load optimization and supply chain profitability. Details of the purchase have not been released.

“Esko is continually evolving from a prepress solution provider to an end-to-end supplier in the packaging world. It is our strategy to improve and drive profitability, utilization and failsafe solutions for our customers all the way from design to the point of sale,” stated Carsten Knudsen, Esko President and CEO. “CAPE has already made inroads in the brand owner and retailer packaging space. Adding their palletization tools to our portfolio supports our strategic goals.

The company continues to state there are close links between ArtiosCAD, Esko’s structural package design software, and CAPE PACK, which uses ArtiosCAD data for calculation and simulations within the software. Additionally, CAPE reports can already be managed within Esko’s WebCenter packaging management platform.

“There could be no better future for CAPE than to join Esko, one of CAPE’s most dynamic and familiar business partners,” stated Brad Leonard, CEO of CAPE. Currently headquartered in Texas, CAPE’s products and staff will be integrated into Esko’s portfolio and organization.

PrintAction sat down with the principals of Peel Graphics, which filed for bankruptcy in early August, and Advertek, which subsequently acquired some of Peel’s assets as part of its continuing growth strategy.

Peel Graphics, with locations in Brampton and Markham, Ontario, filed for bankruptcy on August 9 with total liabilities of approximately $6.6 million, of which around $4.8 million is owed to unsecured creditors. News of Peel’s closing sent shockwaves across Toronto’s printing community, which held the vast majority of Peel’s some 170 owed creditors.

Following a report by PrintAction about the bankruptcy filing, Advertek of Vaughan, Ontario, released a statement on August 20th that it had acquired assets of Peel Graphics. Advertek has purchased Peel’s 41-inch Heidelberg Speedmaster XL 105 press, various finishing equipment, and is currently in discussions with secured creditors to bring in more of Peel’s production equipment.

The Heidelberg XL 105 is scheduled to be installed sometime over the next month. It will replace Advertek’s aging perfecting press, circa 1998, which was purchased at auction following the bankruptcy of Allprint Ainsworth Associates, then a 34-year-old commercial printing company based in Kitchener, Ontario, in February 2010. Advertek also currently runs a 2005 40-inch, 6-colour Heidelberg CD 102 press with coater; 20-inch, 4-colour Heidelberg SM52 with coater; as well as an array of toner and inkjet production systems.

In addition to the asset purchase, Advertek also took on 35 former employees of Peel Graphics. “We have hired 85 percent of Peel’s staff, so from our point of view we have done something good,” says Simon Spina, co-owner of Advertek and Director of Finance. “We have kept people employed and we are going to continue to service Peel’s client base with the same level. So, we think we are doing something good for the community and for our industry, which has taken some major, major hits over the last five to 10 years. We will continue to reinvest and to grow and to hire.” 

Andrew Cook, former President and a principal owner of Peel Graphics, has joined Advertek in a sales capacity. Susan Nyilas, who was also a principal of Peel and its former General Manager, moved to Advertek, as well. Peel Graphics was a generational family business for more than 40 years – tracing its roots back to 1933 with a local community paper. The company’s primary Brampton, Ontario, plant was focused on sheetfed-offset production with the XL 105 press, in addition to running a Xerox iGen4.

“We opened [Peel’s] Markham facility two years ago and I would call that a bit of a disaster. It took quite some time to get work going in the wide-format arena and it really caused a lot of problems for Peel Graphics,” says Andrew Cook. “At the Brampton location we really didn’t have a lot of issues, it was business as usual. The Markham facility was a big challenge for us.”

Peel’s Markham facility was focused on the production of wide-format graphics running an 80-inch-wide EFI VUTEk GS2000. The wide-format operation was led by VP Ron Morgan, former President of Acuity Solutions Group in Richmond Hill, Ontario, which closed its doors in June 2011. Shortly after the closure, Morgan began discussing the start up of a new wide-format operation similar to Acuity with Cook and Nyilas of Peel Graphics. The Peel Markham facility began in August of 2013 with several former Acuity employees, peaking with over 25 staff members.

Advertek is also one of Canada’s fastest growing printing operations. The company was founded 14 years ago. Spina and Joe Montalbano, Advertek's Director of Sales, took ownership of Advertek back in 1999 and in late summer 2010 began construction on a new 30,000-square-foot printing facility in Vaughan, Ontario. The company generated annual revenues of $9 million at the time.

“Since mid-2010 we have grown about 20 percent,” says Spina, who attributes most of Advertek’s growth to the modern facility and focusing sales efforts on specific stable markets like financial, food and beverage, education, and mining. “We are in 12 different industries and we are not top-heavy in any one,” says Spina, “And we are not top-heavy with any one account, either. We have a real wide portfolio of accounts.”

Spina estimates Advertek’s mailing services have grown by around 400 percent since becoming part of the new plant in Vaughan shortly after it opened. Mailing is a service that Peel did not offer to its client base. “Peel was a good fit… We have mailing which they didn’t have and they are in the wide-format game, which we were not involved with,” says Montalbano. “The goal is to sell more to our existing clients and when we bring in new clients then we are able to get the lion’s share of their spend.”

Spina and Montalbano say they have been looking at expanding into wide-format for several months and now plan to run this service out of a 10,000-square-foot facility they recently took control of across from their existing plant. The new division is to be driven by the combined sales force of Peel and Advertek, who will also benefit from their shared expertise in sheetfed-offset work.

“We have been talking for quite some time about getting together and the synergies of putting the two print companies together in a difficult print market and it got pushed along a little faster by BDC,” says Cook. BDC, the Business Development Bank of Canada, is listed as a creditor of Peel’s bankruptcy filing for an unsecured amount of approximately $1.71 million and a secured amount of around $831,000. “It has been a terrible time, but I am very excited to be here. It is a great choice for the staff from Peel – most staff came over here – and I see great things in the future working with Advertek.”

Montalbano indicates Advertek’s future is to include continued growth through acquisition, based on a plan that he and Spina outlined at the very beginning of their 1999 partnership.

“When we first bought the company we had it leveraged pretty high, but we had some immediate growth that took place to support the leverage concept and it has paid off for us,” says Spina. “We are positioned very well at Advertek from a balance sheet point of view. A lot of our competitors have a lot of debt, but we don’t. Our plan was to get to a point where we had a clean balance sheet that would allow us to take advantage of the consolidation happening in the marketplace.”

Texas-based National Envelope, which filed for Chapter 11 in June, has announced it has signed an agreement with Cenveo to sell substantially all of its operating assets.

“We’re very happy with the outcome of the Chapter 11 proceedings,” Jim Pinto, National Envelope CEO, stated. “All parties involved worked diligently to see that the company was sold through the bankruptcy process and received the best possible outcome. This sale ensures the best result for all interested stakeholders, including debt holders, owners, creditors, customers and employees.”

The company has asked the US Bankruptcy Court for the District of Delaware authorize the Company to proceed with a sale of the assets of the business on September 13, 2013. The company says it will ensure a smooth transition  and that orders will continue to be produced and shipped in the normal course of business.

In November 2010, Cenveo acquired Envelope Products Group from MeadWestvaco for an undisclosed sum involving more than 900 employees. Cenveo today has more than 18 envelope facilities across the United States.

Following a report by PrintAction about Peel Graphics filing for bankruptcy on August 9, Advertek of Vaughan, Ontario, released a statement late this afternoon that it has acquired assets of Peel Graphics.

The staff of Peel Graphics, according to the statement, has relocated to Advertek’s operation in Vaughan. This includes Andrew Cook, President, and Susan Nyilas, General Manager, of Peel Graphics.

“Clients of both companies can expect it to be business as usual, but with a broader suite of services, skills and solutions to meet the growing demands and complexities of the industry," stated Joe Montalbano, Advertek's Director of Sales, in the statement.

Advertek was founded 14 years ago. Montalbano and Simon Spina, Director of Finance, took over ownership, along with a third partner no longer involved in the business, back in 1999. The company officially opened its new facility in Vaughan in the summer of 2011.

Pazazz Printing has acquired large-format printer Contact Image. Both companies are based in Montreal.

"We are a proactive company, always looking to expand and provide more solutions to our clients," said Warren Werbitt, Founder and CEO of Pazazz, who sees a natural fit between the two companies. "The Pazazz team is looking forward to working together to do the best we can. We share the same mind set: Think Big, Act Small."
Contact Image was founded in 1972 and has been a major player in large-format printing in Montreal, including being the first company to print on fabric in the city. In 2007, Contact Image went through a restructuring led by Aaron Fish and his appointed President, Jim Topolniski.

Normand Limoges took the helm of Contact Image in 2010. The company provides large-format printing on a variety of substrates, including fabrics, backlit signage, and vinyls. "Just as Contact Image, Pazazz is known for bringing new technologies and innovative print solutions to its customers," said Limoges. "The blending of the two families will be easy."

Pazazz was founded in 1992 and today provides offset printing with UV and conventional inks up to 56 inches, toner production, flexography and label printing, as well as packaging and large-format printing.

Amazon founder and CEO Jeff Bezos announced in a surprise move to purchase The Washington Post for a sum of US$250 million. 

The deal, which is by Bezos and is unassociated with Amazon, is expected to close within 60 days. This deal ends the ownership of The Post by the Graham family after four generations.

“Everyone at the Post Company and everyone in our family has always been proud of The Washington Post — of the newspaper we publish and of the people who write and produce it,” said Donald E. Graham, Chairman and CEO of The Washington Post Company. “I, along with Katharine Weymouth and our board of directors, decided to sell only after years of familiar newspaper-industry challenges made us wonder if there might be another owner who would be better for the Post (after a transaction that would be in the best interest of our shareholders). Jeff Bezos’ proven technology and business genius, his long-term approach and his personal decency make him a uniquely good new owner for the Post.”

The transaction covers The Washington Post and other publishing businesses, including the Express newspaper, The Gazette Newspapers, Southern Maryland Newspapers, Fairfax County Times, El Tiempo Latino and Greater Washington Publishing. The deal does not cover properties such as Slate magazine, and Foreign Policy.

The Washington Post was founded in 1877 and as of 2009, is the fifth largest newspaper in the U.S. by circulation.

KBA continues its push into the packaging sector with a move to take an 85 percent controlling interest in Kammann Maschinenbau GmbH, a German manufacturer of presses and systems for container, label and technical printing.

Private-equity firm Perusa of Munich, Germany, was the previous majority shareholder of the company. In addition to KBA’s 85 percent controlling interest, Kammann’s two managing directors will continue to hold a 15 percent stake in the company. The acquisition is still subject to formal conditions.

The investment in Kammann follows KBA’s March 2013 decision to take majority control of Flexotecnica in Tavazzano, Italy, which is still under review by regulatory authorities. Flexotecnica moves KBA into the flexible packaging sector, with an emphasis on films. Around 100 Flexotecnica employees build central-cylinder flexo presses.

Kammann Maschinenbau was founded in 1955 and has a total of 175 employees. In 2012, the company generated annual sales of over €30 million ($39 million). Kammann primarily produces presses and screen-printing systems for decorating hollow containers made from premium-quality glass, plastic and metal.

Along with screen printing, Kammann’s transport systems can also be equipped with hot-stamping, inkjet printing and decorating processes. Kammann, according to KBA, is the global market leader in developing systems for directly decorating glass containers.

Domtar Corporation of Montreal today announced an agreement to sell its Ariva business in the United States to privately held Central National-Gottesman (CNG) Inc. Ariva's Canadian operations are not affected by the transaction. The Canadian operations are to be consolidated into Domtar's pulp and paper division.

Shortly after its signing the transaction with Domtar, CNG then entered into another agreement to sell the U.S. Midwest portion of the Ariva business to The Millcraft Paper Company, a family-run paper merchant based in Cleveland, Ohio. CNG plans to integrate the remaining United States-based Ariva business into its Lindenmeyr Munroe division.

“Our employees’ efforts to adjust to a rapidly changing printing industry are commendable and I am appreciative of their dedication over the years," stated John Williams, President and CEO of Domtar. “Today's decision to rationalize and sell the business represents the best alternative for our shareholders and the agreement with Lindenmeyr, a well-established and long-time valued business partner of Domtar, will assure business continuity for customers.”

Ariva has approximately 400 employees in the United States, some of whom will lose their jobs, without exact numbers being disclosed. Headquartered in Covington, Kentucky, Ariva operates from 15 locations in the United States across eight states in the Northeast and Midwest regions.

In mid-2012, PaperlinX, as part of a worldwide restructuring program, sold its United States operations, listed as Spicers Paper Inc. and Kelly Paper Company, to Central National-Gottesman for US$76 million. At the time, CNG already ran 22 Lindenmeyr Munroe paper distribution facilities and stores. 

The purchase of Ariva in the United States marks CNG’s sixth acquisition of a paper merchant in the past four years, including five in the U.S. and one overseas. CNG’s sales of pulp and paper exceed $4 billion annually.

Bencis Capital Partners of Belgium has moved to purchase 65.68 percent share interest of Xeikon, owned by Punch Graphix also of Belgium. Punch Graphix has recommended its approval of the deal to shareholders. 

The purchase price offered for the 18,856,298 shares held by Punch is approximately EUR110 million or $150 million in Canadian dollars.

According to the agreement, Bencis will pay a price of EUR 5.85 for each Xeikon share, which equates to a premium of 69 percent versus Xeikon’s closing price on 7 January 2013, or a 32 percent premium in relation to the average closing price of the Xeikon shares over the last six months.

The transaction, expected to complete by mid-September, will still need to meet approval of regulatory authorities in the country. If the transfer of shares is completed, Gimv, another European investment company, is to acquire a 20 percent interest stake in Xeikon.

Xeikon was founded in 1988 and broadened its presence in the printing industry in 2004 with the launch of the Xeikon 5000 and Xeikon 330 toner presses. The architecture of this product line remains core to the company with its subsequent introduction of more advanced models, toners and front-end software.

Ricoh Company Ltd. today announced it made a multimillion-dollar investment in Avanti Computer Systems Ltd., a developer of Print Management Information Systems (MIS) based in Toronto.

This marks Ricoh's second significant investment in a printing-software company in the past 10 months after the company announced its investment in PTI Marketing Technologies in August 2012. PTI Marketing develops Web-to-print and marketing personalization applications, such as such as MarcomCentral and FusionPro, for both enterprise users and print-service providers.

“Avanti’s Print MIS capability is a perfect complement to our portfolio. In the same way we automate print workflow, Avanti automates the printer’s back office systems: inventory management, job pricing, estimating, and billing,” stated Yasuhiko Hosoe, Associate Director and Deputy General Manager, Ricoh Production Printing Business Group. “This strategic move, like our investment in PTI, further demonstrates our commitment to help companies imagine the changes that they can make to automate and improve their businesses, and most importantly, their customers’ experiences.”

Avanti currently has hundreds of MIS installations in commercial printing and in-plant operations, primarily in North America. The investment by Ricoh, which itself has been focusing on the development of new management tools for printers, will allow Avanti’s MIS applications, including job costing, tracking and billing, scheduling, CRM, inventory management, warehouse and direct mail management, to reach a broader global market. Headquartered in Tokyo, Ricoh Group operates in about 200 countries and regions. In the financial year ending March 2013, Ricoh Group had worldwide sales of 1,924 billion yen (approximately $20 billion).

“At Avanti, our priority has always been to invest in our people and our technology, which in turn, provides our customers with innovative, effective and award-winning software solutions,” stated Patrick Bolan, President and CEO of Avanti. “This strategic investment by Ricoh means that we can accelerate product development and expand into new markets, and most importantly, ensure that both current and future customers have options when choosing a Print MIS system.”

Since its founding in 1984, Avanti has been specifically focused on the development of print management software for the printing industry. At Graph Expo in September 2012, Avanti showcased version 12.4 of its Graphic Arts Management System, including its new Advanced Fulfillment module which was named as a Must See ‘Em product. The Advanced Fulfillment module includes a contract management system, where print providers can manage and track their customers’ finished goods, as well as manage the billing of those goods.

Annex Business Media of Simcoe and Aurora, Ontario, has acquired PrintAction magazine, its associated media properties, and the Canadian Printing Awards, from Youngblood Publishing Ltd. of Markham.

“We at PrintAction are very excited to become part of the dynamic Annex team,” says Sara Young, Publisher of PrintAction and President of Youngblood Publishing. Young has joined Annex and is to continue in her role as the publisher of PrintAction. The magazine's full-time staff is also joining the Annex organization.

“I personally look forward to continuing to build the PrintAction brand," says Young, "And creating new opportunities for members of Canada’s printing industry to communicate with one another.”

Annex Business Media is Canada's largest privately owned business-to-business media company, with 37 B2B publications and 54 digital brands reaching business communities through print, news Websites, electronic newsletters, events, digital video and social media.

“This is an excellent acquisition for Annex,” says Mike Fredericks, President of Annex. “The PrintAction properties fit very well with our print and digital business model and the annual awards event provides a platform for expansion into other sectors that we serve. Sara’s knowledge of the industry will be of benefit not only in our publishing group, but also our publication printing division.”

PrintAction magazine was founded in 1961 by Sara Young’s father, John Young. The publishing entity, among other initiatives, has produced an annual Buyers’ Guide for the graphic communications industry since 1994. In 2006, PrintAction began the annual Canadian Printing Awards program to recognize the best in Canadian printing, while presenting notable speakers such as David Suzuki, Brian Mulroney and Stephen Lewis.

Drytac, an international manufacturer of adhesive-coated products, has acquired Toronto-based adhesive coating company Multi-Tac Inc. Multi-Tac has been serving the industry, both domestic and abroad, for nearly 25 years through the manufacture of pressure-sensitive products and custom coatings.

“The combined operation will result in improved efficiencies, greater flexibility and shorter development time from customer concept to finished product,” stated Marc Oosterhuis, President of the Drytac Group. “With an increased coating, slitting and sheeting capacity, we can not only expand our standard product range but grow our specialty custom coating services in North America.”

According to Drytac, the acquisition allows the company to offer aqueous, solvent and hot-melt coatings. It will also be able to offer adhesive and top coat up to 61 inches wide. Existing Multi-Tac customers in Europe and the Middle East will be handled through Drytac Europe, based in Bristol, UK.

In related news, the company also announced the sale of its UV liquid coating division to North Carolina-based Advanced Finishing Technologies, a member of the Digital2You network. Current manager of Drytac’s UV liquid coating line will join Advanced Finishing Technologies as a result.

[UPDATED June 28, 2013, 2:00PM EST] K-North Inc. has ended its distribution agreement with Komori America. Steve Ranson, who served as VP at the company, is forming a new entity called K-North Services Inc., which is to begin operations in Georgetown, Ontario on August 1, 2013.

K-North Inc. of Mississauga, owned by President Liana Howard, became Komori America’s sheetfed press distributor for Ontario and Western Canada in 2003 and proceeded to reestablish the Komori press brand across the country. Ranson was heavily involved in this effort through his previous role as Vice President of K-North Inc. He now takes on the title of President of K-North Services Inc.

"We look forward to continuing the great success of Komori in Canada," says Ranson.

Over the past decade, K-North Inc. placed new-generation Komori technologies like the Lithrone S40, SX29, and GL40 into dozens of Canadian pressrooms. The organization also ran one of Canada’s largest press service departments through its Komori-Kare program (established 2010) and REMOTE-ACCESS (established 2012).

“We at K-North Inc. felt it was the right time to cease selling new machinery,” reads a statement issued this morning by K-North Inc. “During the last few months, we together with Komori America discussed the right way to provide peace of mind to our customers, and we are both happy to report that effective August 1, 2013, a new business, K-North Services Inc. will continue the work and take over all Komori obligations. Furthermore, the right management and ownership has been put in place headed by Mr. Steve Ranson.”

When K-North Services begins operations on August 1, 2013, the new business will also distribute consumable products like the K-Press blanket cloths and Finito blankets, as well as KUDA guillotines and peripheral equipment.

Somerset Graphics has installed a new 6-colour, 29-inch Komori LSX 629 press with UV capabilities into its Mississauga facility.

The Komori LSX 629 press, sold through K-North, can do both inline UV printing and conventional printing with water-based coatings. The new 29-inch press also includes fully automatic plate changers and wash-up systems, as well as closed-loop colour controls.

“We will have more to offer our customers at very competitive prices,” stated Jack Youngberg of Somerset Graphics, in a press release. Youngberg also noted the benefits of adding another interdeck press system on the company’s pressroom floor.

Founded 33 years ago, Somerset Graphics is a privately owned commercial printing operation and well known in the Greater Toronto Area for its focus on high-quality production.

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