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Mergers and Acquisitions and the Ink Industry

By David Savastano, Ink World Editor | 12.20.12

The printing ink industry has seen its share of struggles in recent years. The economic downturn that started in 2008 hurt the printing industry, which, in turn, impacted ink manufacturers and their suppliers. Raw material pricing dramatically increased while availability of key ingredients became a challenge. The growth of the Internet changed how people gathered information, which has had a major effect on the publication market.

One would think there would be plenty of consolidation throughout the printing supply chain, and for the most part, this has been true, particularly among printers themselves.

The printing industry has seen its share of mergers and acquisitions (M&A), most notably Quad Graphics’ takeover of Vertis late this year, and before that, World Color, but certainly there have been many others on both the publication and packaging sides.

Ink industry suppliers have seen many mergers and acquisitions as well. In 2012 alone, Eastman acquired Solutia, Sun Chemical acquired Benda-Lutz Werke GmbH, and Arsenal Capital Partners bought Plasticolors, the Colortrend Business from Evonik and Elementis’ colorants business, forming Chromaflo. Arsenal also acquired IGM Resins.

Since 2008, we have seen the departure of long-time ink industry suppliers such as Ciba Specialty Chemicals and Rohm & Haas, while many other companies have eliminated unprofitable products.

Yet the ink industry seems to have largely avoided M&As. Looking over 2012, there were only a handful of acquisitions of note: DIC acquiring Pacific Inks in New Zealand, and Suzhou Kingswood Printing Inks purchasing Brancher. In addition, DIC subsidiary Sun Chemical signed a joint venture agreement with Druckfarben Hellas for South Eastern Europe. Outside of conventional ink, The Carlyle Group bought DuPont Performance Coatings business for $4.9 billion.

There are probably quite a few root causes for the lack of acquisitions in the ink industry. Margins have been depressed due to the inability of ink companies to pass along the full brunt of the higher raw material prices, making the industry less attractive for outsiders while limiting cash flow for ink manufacturers themselves. With the publication and commercial printing markets undergoing upheaval, the ink companies supplying them are facing their own challenges.

Packaging and digital ink companies are faring better than the publication and commercial side. However, the digital side had its consolidation prior to the recession, and many of the mid-sized family-owned packaging ink companies were acquired in 2009 and 2010 (Environmental Inks by Siegwerk, Fluid Ink Technology by Toyo, Torda Ink by Flint Group, Water Ink Technologies by ALTANA).

Looking forward, it is difficult to guess what will occur in terms of mergers and acquisitions for the ink industry in 2013. There will undoubtedly be plenty of rumors, but as for actual deals, probably no one knows for certain what lies ahead in 2013.