Benson deal proves there is still money in [some kinds of] print
Friday, February 21, 2014
Jo Francis puts aside the Facebook/WhatsApp hooplah to look at a significant M&A deal somewhat closer to home.
Little wonder that M&A discussions this week have been dominated by Facebook’s $19bn deal to acquire WhatsApp. Mind-boggling numbers indeed, and it remains to be seen if this is another dotcom bubble in the making.
But here in print we have had something equally significant to report, that being the £100m ($165m) acquisition of Benson Group by Graphic Packaging of the US of A.
Who said there’s no money in print? Although in this case, it is of course packaging print.
It is well-documented that packaging is viewed as a more robust market than many areas of commercial printing, because packaging can’t simply be replaced by a bit of online code.
Many major deals of late have revolved around this space, such as Graphic Packaging’s previous purchases, the Chesapeake and Multi Packaging Solutions merger, and Sun Capital’s swathe of European buys including Britton Group and Paragon Print & Packaging.
It’s a definite hat-tip to Mark Kerridge and the team at Benson for growing a substantial business, and for effecting a successful MBO followed by a successful sale. Looks like a good deal for all parties.
Benson was a top 20 company in PrintWeek’s Top 500. In its most recent accounts it posted turnover of £116.7m and a pre-tax profit of £7.4m (up 53%, well done chaps).
In simple terms the buyout represents a multiple of 13.5x on those profits. Nowhere on the scale of, say, WhatsApp, but double-digit nonetheless. And Benson is a business that makes things and actually makes money.
Putting aside the wicky wacky world of dotcom valuations, I realise that acquirers may look at different metrics. One acquisitive captain of industry told me that his focus is a multiple of EBITDA, and the consistency and likely sustainability of that figure.
We have other notable examples in the past where print-related businesses have achieved dizzy multiples and massive paydays for the architects of their success: Centurion, Astron and Moonpig being obvious examples.
The critical factor, always, is getting both the business and the timing right.
It looks like Benson Group has done just that.