To get a big-picture view of the fast-changing M&A landscape in labels and packaging, we reviewed many of the press releases that acquiring companies issued in 2021. While these news releases don’t disclose financial terms or post-merger integration details, the optimistic quotes from the dealmakers provide a sense of what private-equity investors, acquiring companies, and business sellers hope to achieve with their deals.
The press-release summaries below illustrate several different buying strategies and why certain companies caught the buyer’s attention.
From the quotes below, you will also see why I tell business owners that private-equity buyers want companies that are prepared for the sale and ready to act. Many well-funded buyers want assurances that talented leaders teams will stay with the company after the sale.
Fort Dearborn Company Acquires Hammer Packaging
Fort Dearborn Company in Elk Grove Village, Illinois is a supplier of high-impact decorative labels for food, beverages, spirits, paints, coatings, household cleaners, personal care products, beer, and nutraceuticals. On March 2, they announced the acquisition of Hammer Packaging, a supplier of cut and stack, in-mold, pressure-sensitive roll-fed, and shrink-sleeve labels and flexible packaging.
The acquisition added capacity, capabilities, and Hammer facilities in West Henrietta, NY and Rochester, NY to Fort Dearborn’s network of 19 facilities nationwide. Fort Dearborn recognized Hammer Packaging’s loyal and valued customer base and strong reputation for delivering innovation and quality products.
“As the fourth generation to own the company, I have guided the company with a ‘Lead, Don’t Follow’ philosophy,” said Jim Hammer, President and CEO of Hammer Packaging. “In order to continue our growth and thrive, we made the historic decision to join the Fort Dearborn Company.”
Source: Fort Dearborn Company Announces the Acquisition of Hammer Packaging Corporation (prweb.com)
CD&R Leads Merger of Fort Dearborn and Multi-ColorCorporation to Create Scaled Global Label Manufacturer
On November 1, Clayton, Dubilier & Rice completed the combination of Fort Dearborn Company and Multi-Color Corporation (MCC). The merger creates the world’s largest prime label supplier by revenues. The deal was announced July 2, 2021.
With approximately $3 billion of annual revenue, the combined company serves many of the world’s most prominent brands across end categories such as Food and Beverage, Home and Personal Care, and Wine & Spirits. The combined platform benefits from enhanced scale and diversification across label technologies, end categories, geographies, and customers.
The CD&R funds acquired Fort Dearborn from Advent International and MCC from Platinum Equity.
MCC is a Cincinnati, OH-based label-solutions company established in 1916. MCC serves national and international brand owners in North, Central and South America, Europe, Africa, China, Southeast Asia, Australia and New Zealand.
Kevin Kwilinski assumed the role of President and CEO of Multi-Color Corporation after serving in that position at Fort Dearborn. He said the combination of Fort Dearborn and MCC “an exciting day for our customers, suppliers, and employees alike.”
“We believe our expanded product offerings and global reach will be a strong foundation to better serve the dynamic and evolving needs of our global customer base while providing employees with rewarding career-growth opportunities,” he added.
“We are excited to help strengthen a global prime label business through this combination,” said Robert Volpe, CD&R Principal. “We believe that the combined company will have a scaled global platform across end categories and geographies,innovative label technologies, favorable growth prospects, and a deep set of capabilities to serve customers all over the world.”
David Scheible, operating advisor to CD&R Funds and former Chairman and CEO of Graphic Packaging, assumed the chairmanship of the combined company.
C-P Flexible Packaging Closed Three Acquisitions
A long-time portfolio company of First Atlantic Capital, C-P Flexible Packaging acquired Prestige-Pack in Wisconsin, Fruth Custom Packaging and Cleanroom FIlm and Bag in Placentia California, and Prestige Pak in Norcross, Georgia.
“Our strategic plan was to help create a flexible packaging organization with coast-to-coast presence and a broad portfolio of products,” explained Roberto Buaron, Chairman of First Atlantic Capital.
Prestige-Pak, Inc. is a second-generation, family-owned converter that has been in business for 53 years. The company focuses on printing packaging films for the retail food markets. The acquisition expands C-P’s multi-plant manufacturing base to support rapid response times for customers. C-P Flexible Packaging also believes Prestige-Pak’s long standing customer relationships provide a strong foundation for growth.
Preferred Packaging makes multilayer flexible films and thermoformed containers and supplies tray sealing equipment for meal-solution providers and school systems. In addition to expanding C-P’s geographic reach in the Southeast U.S, this acquisition provides C-P with expertise in refrigerated and frozen prepared meal packaging systems.
Fruth Custom Packaging and Cleanroom Film and Bag have common owners and provide C-P with expanded geographic reach on the West Coast and expertise in medical device, biopharmaceutical, electronics and semiconductor packaging. C-P Flexible Packaging began in 1958 as a two-person shop. Now the company is a full-service flexible-packaging converter with over 800,000 sq. ft. of manufacturing space at eight locations in the U.S.and one in Canada.
Sources:
C-P Flexible Packaging Announces Acquisition of Prestige-Pak, Inc. – C-P Flexible Packaging (cpflexpack.com)
C-P Flexible Packaging Acquires Preferred Packaging in Georgia – C-P Flexible Packaging (cpflexpack.com)
C-P Flexible Packaging Acquires Fruth Custom Packaging, Inc. and Cleanroom Film and Bag, Inc. – C-P Flexible Packaging (cpflexpack.com)
Rohrer Corporation Acquires Coburn Carton Solutions
A portfolio company of Wellspring Capital Management, Rohrer acquired Coburn Carton Solutions on October 4. Rohrer is a leading retail-packaging designer and manufacturer that uses state-of-the-art technology. Coburn Carton Solutions, based in Hayesville and Ashland, Ohio, is a top producer of printed folding cartons and point-of-purchase displays.
The acquisition strengthens Rohrer’s printed folding carton capabilities by adding structural design, large-format printing, and folding and gluing.
Carmine Lombardi, Executive Vice President of Rohrer Corporation, said Acquiring Coburn helps us expand the sustainable packaging solutions we offer to our customers. At the same time, Coburn customers will now enjoy a one-stop shop with Rohrer’s full suite of packaging solutions.”
Source: Rohrer Corporation Acquires Coburn Carton Solutions – Rohrer Corporation
Fortis Solutions Group Acquires Quality Tape & Label Oct. 11
Fortis Solutions Group in Virginia Beach, Virginia provides high-impact printed packaging solutions. On Oct. 11, they announced the acquisition of Quality Tape & Label, a Marietta, Georgia-based company that specializes in digitally printed shrink sleeves, flexible packaging, and pressure-sensitive labels to the craft beer, nutraceutical, food, health, and beauty end markets.
“After 40 years of being a close-knit family operation, it’s hard to let go,” said Rick Daniels, CEO of Quality Tape & Label. “But moving the reins to Fortis is a decision I’m very comfortable with.and believe it will be very beneficial for all involved.”
Source: Fortis Solutions Group Acquires Quality Tape and Label Co, Inc. | Fortis Solutions Group
Harvest Partners Acquires Fortis Solutions Group Oct. 15
Just four days after Fortis announced the QTL deal, Harvest Partners LP announced the acquisition of Fortis Solutions Group from its long-time parent company Main Post Partners. Harvest Partners LP is a New York-based private-equity investment firm that focuses on investments in middle-market companies.
According to its news release, Harvest regards Fortis Solutions Group as a best-in-class provider of specialty packaging solutions with a full range of flexographic and digital printing capabilities and sales offices throughout the U.S. Harvest noted that Fortis serves a blue-chip customer base across the food and beverage, health and beauty, retail, agricultural chemical, and nutraceutical end markets.
But just because Fortis has a new parent company doesn’t mean Fortis will stop acquiring smaller companies. Fortis has completed 13 acquisitions since 2014 and is actively seeking both tuck-in and transformational acquisitions in the pressure-sensitive labels, shrink sleeves, and flexible packaging markets.
Resource Label Group Acquired Five Companies
Resource Label Group in Franklin, Tennessee,is a full-service provider of pressure sensitive label, shrink sleeve and RFID/NFC technology for the packaging industry.
In 2021, Resource Label acquired five additional companies in different U.S. regions: New England Label (March 8), Cypress Mutligraphics (May 4), Teklabel and Printing (August 12), Ample Label (Sept. 21), and StickerGiant.com (Oct. 1)
New England Label is a premier flexographic, digital, and screen printer that offers custom label solutions with a focus on food, beverage, health and beauty, industrial, medical, and pharmaceutical markets.
Steve Dunlevy, President of New England Label, planned to continue his role after the acquisition: “I’m excited about this next part of the journey with Resource Label Group as their beliefs greatly match our drive to innovate and focus on customer service.”
Cypress Multigraphics creates durable labels for producers of lawn and garden products, HVAC equipment, power tools, medical equipment, and appliances.
Teklabel offers a range of digital and flexographic printing capabilities as well as state-of-the-art finishing technology. Their core offerings include prime labels and promotional, sustainable, and flexible packaging solutions for the food, wine, personal care, nutraceutical, and medical markets.
Jim Di Bona and David Hinds, founding partners of Teklabel will continue in key leadership roles. Di Bona said, “Resource Label shares our commitment to ensuring the long-term success of our customers and valued employees.” “Jim and David have built an impressive business and we are honored to have their leadership, experience, and passion for exceeding the needs of customers and employees,” said Mike Apperson, President and CEO of Resource Label Group.
Ample Labels was founded in 1968 and has grown to become a leading digital and flexographic printer for regional and national customers in the food, health, personal care, industrial, pharmaceutical, and beverage segments. “As part of Resource Label Group, we are ensuring that our customers always have access to key capabilities that drive innovation in the packaging industry,” said Ample Labels founder David Menzies.
StickerGiant.com is the leading e-commerce sticker and label manufacturer in North America. Their focus is on quick-turn custom digital label printing for a variety of industries in the U.S. and Canada. Created by John Fischer in 2000, StickerGiant was one of the first online sticker companies and is committed to producing most sticker and label product orders within 24-48 hours.The company is continuing to operate under the same brand name and manufacturing operations will remain in Longmont, Colorado.
Sources:
Resource Label Group Expands Presence in Northeast With Acquisition of New England Label | Business Wire
Resource Label Group acquires Cypress MultiGraphics expanding presence in the Midwest | Resource Label Group
Resource Label Expands California Presence with the Acquisition of Teklabel | Business Wire
Missouri-based Ample Labels Acquired by Resource Label Group | Business Wire
Resource Label Group completes acquisition of StickerGiant.com | Resource Label Group
BGL Announces the Sale of StickerGiant.com, Inc. (prnewswire.com)
Resource Label Group Acquired by Ares Management
In July, Resource Label Group, LLC (“Resource Label”) completed a merger agreement with funds managed by the Private Equity Group of Ares Management Corporation (“Ares”). Resource Label was previously a portfolio company of First Atlantic Capital and TPG Growth.
“Ares is the right partner at the right time. Joining with Ares is an exciting change for our customers and team members as we move to accelerate growth and expand the RLG family,” said Mike Apperson, President and CEO of Resource Label Group. “Ares brings a wealth of resources and expertise that will further enhance the value and solutions we provide our customers. Our team is energized by the opportunity ahead of us.”
Source: Resource Label Group acquired by Ares Management | Business Wire
Inovar Packaging Group Acquired Two Companies
Inovar, headquartered in Dallas, Texas, produces packaging products for many of the nation’s leading brands across multiple industries. In 2021, Inovar Packaging continued to execute their strategic plan for growth both organically and through acquisitions.
To advance their goal of building regionally based prime label businesses, they acquired Precision Label in Oceanside, CA and Dion Printing in Westfield, Massachusetts.
Precision Label serves the personal care, food and beverage and nutrition sectors. Jeff Brezek, Executive Chairman and CEO of Inovar Packaging, observed that “Co-owners Pete Krudwig and Joe Feeley have built a truly differentiated label business over the last 23 years. They provide industry-leading customer service and continuously push the boundaries with innovative solutions and services. Krudwig and Feeley will continue to lead what will now be Inovar’s flagship West Coast location.”
Dion Label Printing is a second-generation family-owned business that continuously pushed to innovate in both digital and flexographic printing.
“The leadership team, including John Dion, Dave Dion, Randy Duhaime along with the entire Dion Label team, have built an exceptional label business over the last 50+ years,” said Brezek. “Their brand stands out as one known for industry- leading quality, reliability, responsiveness and innovativeness.
novar Packaging Group was acquired by AEA Investors SBF LP in 2016.With the addition of Dion Printing, Innovar has acquired 7 companies and now has manufacturing facilities in Texas, Massachusetts, Florida, Wisconsin, Kansas, and California.
Sources:
Inovar acquires Precision Label – Inovar Packaging Group
Inovar Packaging Acquires Dion Label Printing – Inovar Packaging Group
Other M&A Activity in 2021:
- Signature Action Packaging, an H.I.G. Capital Company, acquired Chromatic Productions
- Landaal Packaging Systems acquired Westcott Displays Through Asset Purchase
- Premium Label & Packaging Solutions LLC (a portfolio company of Dunes Point Capital) acquires Luminer Converting Group, LLC.
- Mason Wells acquired KDV Label and I-Graphics
- Genstar Capital signed a definitive agreement to acquire Brook + Whittle from Tru Arc Partners
Lessons Learned
Here are a few points to consider about 2021 M&A Activity in the Packaging and Labels field.
Label and packaging companies are attractive to private-equity groups for two reasons: they are undergoing digital transformations that will bring new capabilities. And with all the uncertainty during the COVID year of 2020, label and packaging companies proved less susceptible to economic disruptions than other businesses.
There was so much competition for the best label and packaging companies that buyers paid EBITDA multiples between 4 and 15 for well-run companies that fit their strategic objectives.
Buyers seek companies with specific capabilities, market share, market diversity, loyal customers, geographic locations, and operational talent that can help them take the business to the next level. Deals fall apart when the owner is indecisive or difficult to work with.
Clearly, M&A activity will continue at all levels in 2022. Long-time family-owned businesses can still find opportunities to sell their business.
But in 2021, middle-market private equity groups that acquired “platform” label companies to lead additional acquisitions are now selling the consolidated label companies to larger private-equity groups. I wonder what the exit strategy will be for deals such as the one that merged Fort Dearborn and Multi-Color Corp. At what point will a global network become too big to sell?
The private-equity groups have high expectations and efficient methods in place to evaluate and close deals. But these types of deals don’t happen overnight. If you are ready to prepare your company for sale in 2022, give me a call at 561-543-2323 for a confidential discussion.
If some of the terms used to describe M&A activity are unfamiliar to you, request our guide “Demystifying M&A Jargon.”