Coveris America deal turns it into one of the largest flexo printers in North America 
Transcontinental made an historic pivot in early April. 
Companies merge and change direction all the time, but given Transcontinental’s long-established position at the top of the heap of commercial printing, this particular pivot is more like a tectonic shift. 
With the announcement that it planned to purchased US-based Coveris America, the Montreal-based company shifted firmly away from its core business of the last 42 years and moved aggressively into flexo packaging. The acquisition, a US$1.32 billion deal, transforms Transcontinental into one the top-10 flexo packaging converters in North America.
Both Isabel Marcoux, chair of Transcontinental, and Francois Olivier, president and CEO, spoke about the move in terms of its significance during a press conference in early April. “This is a historic moment for Transcontinental,” said Olivier. “This is of capital importance. It’s one of the biggest, if not the biggest, transaction in our history.” Marcoux called the deal transformational, in line with the vision of the company and one that positions Transcontinental “nicely” to continue to consolidate in the soft packaging market.
As bold as this deal is, the groundwork for it has been laid for it over the last four years. Since 2014, Transcontinental has steadily been making incursions in the packaging market and it had made six acquisitions in that segment. In fiscal 2017, packaging accounted for 15% of the company revenues, and while printing remained the bulk business, at about 74% of revenues, the number of printing plants had shrunk to 18 from 54 in 2008. Significantly, while the short-term goal is to integrate Coveris into the parent operation, in the long term Transcontinental is looking at growth and more acquisitions in the packaging market.

A history of pivots

Transcontinental has always been deft at pivoting and consolidating. Those who have been following its history will remember it scooped up some of the leading names in the commercial world, including O’Keefe Printing, Litho Acme, Yorkville Printing, RBW Graphics, Optipress, LGM Graphics, Ross-Ellis Printing, Metropole Litho, Metrolitho, and PLM in a $130 million purchase in 2007. In the late 90s it also made big pushes into the US where it acquired direct marketing operations, and it bought one of Mexico’s largest flyer-printing companies, Refosa. 
It then pivoted into publishing and media, and for a while it was one of the largest magazine and newspaper publishers in Canada. It was a huge book printer. Around the turn of the millennium, the company targeted newspaper printing, having keenly spotted the emerging trend of publishers outsourcing their printing. The San Francisco Chronicle and The Globe and Mail were huge contracts for the company that required equally huge investments. 
Some of those moves came to natural ends, and some were unsuccessful. Notably, the forays into the US and Mexico were shuttered when they didn’t meet expectations, and the company refocused on its role in Canada. It made strategic investments, shut down a number of plants and focused on profitability as it, like the rest of the industry, dealt with the battering of print. Revenues have remained around the $2 billion mark since about 2010. But, throughout it all, the company had always lived in the commercial printing space.
This is perhaps the biggest pivot of its life. It will remake the company Remi Marcoux founded in 1975 with two partners. They were young men in a hurry and eager to stake out their destinies. That first year they broke even on $3 million in sales. Back then, Marcoux has said, his goal was to run a large public company. He envisioned going public when he reached $100 million in sales. He hit that target ahead of schedule and took his company public around 1981. Since then he has run the company with a keen and dispassionate eye for opportunity. Remi Marcoux would certainly not get sentimental about this latest shift away from the roots of his company, but this pivot feels like it should be marked.

The Deal at a glance

Price  US$1.32 billion 
Coveris America revenues US$966 million in 2017
Employees 3,100 
Facilities 21 facilities in US, Mexico, UK, Ecuador, Guatemala, New Zealand, China
Customers 3,500 customers
Transcontinental pre and post transaction
Pre Coveris Post Coveris
Revenue
$2.0 billion $3.3 billion
Revenue breakdown
15% packaging 48% packaging
74% printing 45% printing
11% media 7 % media
Facilities
18 printing plants 18 printing plants 7 packaging plants 28 packaging plants
Employees
6,500 9,600