Just a week after it instigated the purchase of the ANZ Hexagon labels businesses for A$381m, the world’s biggest label printer, Multi-Color Corp, has itself been sold by its p/e owners, and will be rolled into a giant new labels and packaging operation.
The new entity is being created by private equity fund CD&R, which is buying 20-plant US labels and packaging printer Fort Dearborn at the same time as MCC, creating a global labels and packaging operation on a scale to rival CCL. Together the merged business will generate an initial US$3bn annual revenue.
The acquisitions and merger are subject to customary closing conditions and are expected to be completed by the end of this year. MCC is currently owned by Platinum Equity.
For the Hexagon-owned business in Australia and New Zealand – Hally Labels and Label Partners in Australia, with Adhesif Labels, Hally Labels, Kiwi Labels and Rapid Labels in New Zealand – and their 500 staff, it means two changes of owners in seven days.
The new owner of MCC and Fort Dearborn, CD&R, gains a business with a solid future generating significant returns, just the Hexagon businesses for instance are generating a profit of $1m a week, according to the financial press. The fund has signalled it intends to seek significant growth in the new business.
The combination of Fort Dearborn and MCC will create a diversified platform across label technologies, end categories, geographies and customers. It will serve a diverse mix of customers active in a number of end categories, including wine and spirits, food and beverage, beer, and home and personal care.
Fort Dearborn has 20 plants across the US, producing labels for the consumer goods marketplace. Multi-Color Corp has its headquarters in the US, in Ohio, and has 10,000 staff operating 86 plants in 26 countries including Australia and New Zealand. It was formed in 1916.
Nate Sleeper, chief executive officer of the new owner CD&R said, “We see strong strategic logic and promising value creation potential in bringing these two leading label manufacturers together.
“We look forward to working with the combined company's leadership team to help drive innovation and enhance its offering to a highly discerning customer base around the world. We see numerous opportunities to drive operational scale, achieve sustained growth, and we believe our expertise can help position the combined company for success well into the future."
Nigel Vinecombe, CEO of MCC said, “At MCC, we have continually worked to invest in our people, processes and technology in order to strengthen our organisation and become one of the most trusted and innovative label manufacturing leaders across the globe.
"This combination with Fort Dearborn and the ongoing support of value-added investors provide the opportunity to continue to strengthen the business, invest in the expansion of our global footprint, and provide best-in class service to our customers."
MCC’s enlarged Australasian group including the Hexagon businesses will be led by Daren Hudson, MCC president, Australia and New Zealand. Hexagon CEO Greg Howell – who has been with the business since the start – will assist across an agreed transitional period.
The Hexagon business was built when Mercury Capital got into labels eight years ago with the purchase of several New Zealand label printers, following the withdrawal of the giant P/E funds from Blue Star and Geon, and spent the years since rolling other label businesses – including Hally Labels in Australia, which also took over AC Labels – into the group.
Its strategy in New Zealand had been to run the companies as independently competitive entities, whereas in Australia it has rolled them all up into the Hally Labels banner. Hexagon bought Adelaide-based Label Partners just three months ago, giving it a bulwark in SA for the wine market.
