For much of the past decade and a half, discussions about mergers and acquisitions in the printing and packaging industries have been dominated by the steady drumbeat of label-printing deals, as often reported here in The Target Report. (See The Target Report: Duking it Out in the Label Business – February 2023). However, over the past several months, transactional activity in the label segment has slowed, and there have been rumblings that the overall label printing and converting businesses face increasing headwinds.
Those rumblings turned unmistakably loud on January 29th, when Multi-Color Corporation (“MCC”) filed for Chapter 11 protection under a prepackaged restructuring plan designed to slash its debt load, eliminate existing equity, and fundamentally reset its capital structure. Supported in advance (hence the “prepack”) by the majority of its senior lenders and its private equity sponsor, CD&R, the filing allows MCC to continue operating without disruption.
MCC’s importance to the industry and the impact of the bankruptcy filing cannot be overstated. As of the bankruptcy filing, the company operated in 25 countries, with over 90 facilities, of which 39 are in North America. The company employs 12,800 people worldwide, with 4,870 of those working here in the US. The parent company has 85 wholly owned subsidiaries and 56 related debtor entities that filed for bankruptcy concurrently with MCC.
The MCC bankruptcy filing is the clearest signal yet that the consolidation in the label printing and converting sector has entered a more mature, and far less forgiving, phase. For many in the label business, including other PE-backed label platform companies, a top contender in the contest for a high-multiple exit from ownership has been taken off the field, at least for the foreseeable future.
Read the rest of this post on Printing Impressions, a publication of PRINTING United Alliance, ASI’s strategic partner.
