The Target Report: Apollo Trades Textbooks for Wallpaper & Pillows — June 2021 M&A Activity

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Apollo Global Management, the leading publicly traded alternative investment firm, acquired an on-demand fabric printing company Spoonflower through its platform, Shutterfly, the on-demand photo book printing company. The very next day, Apollo announced that it was divesting its stake in McGraw Hill, the publisher of textbooks and digital content that serves the education markets.

Spoonflower has transformed the on-demand home decor market into consumer staples categories. The on-demand digital printing platform allows consumers to design their own designs on a multitude of products such as pillows, blankets, sheets, towels, curtains, tablecloths, napkins and sets. table. If you want to match the walls with the pattern of your choice, custom wallpaper on demand is also available. If you are comfortable with needle and thread, the fabric can be printed by the meter so you can sew your own designs. The substrates available include a variety of linens, cottons, polyesters and even spandex.

The company boasts that its platform is home to 3.3 million unique creative people who upload an average of 4,000 new designs every day. More than 25,000 designers have published their designs in the public space on Spoonflower, available to consumers who browse all published designs to select, apply and order print items. The designers are not hidden behind the Spoonflower façade; instead, they are showcased, praised, rewarded in ongoing design contests, made known to consumers browsing the website, and paid a commission when their designs are ordered.

Strategically, the acquisition of Spoonflower fits clearly into Apollo’s Shutterfly platform. Apollo acquired Shutterfly, the leader in digital photo storage, print processing and personalized merchandise segment, in June 2019 for $ 2.7 billion. Just to ensure it would be the dominant player in the highly competitive and fragmented photo space, Apollo simultaneously acquired Snapfish, Shutterfly’s second in the photo book printing and related online photo products segment. . Included in the Shutterfly portion of the original deal, Apollo also acquired Lifetouch, the school photography company that Shutterfly itself had previously purchased.

Other brands Shutterfly owns include Groovebook, an app that prints monthly photo books from its customers’ phones, and Tiny Prints, a printer for personalized announcements, invitations, and note cards. The collective power and reach of Shutterfly’s print-on-demand capabilities allow consumers to personalize their communications and print environments, from birth announcements to graduation commemorations to home decorations. It’s one more big penny vote of confidence in the future of printing, as long as it’s digital, on-demand, and personalized (see The Target report: Everything on demand – May 2021).

Platinum Equity announced the acquisition of McGraw Hill of Apollo a day after the Spoonflower deal went public. Platinum Equity has significant stakes in companies focused on printing, so printing is no stranger. However, it would be wrong to say that McGraw Hill, the educational content provider, is really still a basic book publisher. As we noted in 2012, when Apollo acquired what was then called McGraw Hill Education, it seemed to us that Apollo’s goal was to use the textbook industry as a launching pad for investing. in digital educational products. At the time, textbook publishers were struggling as governments curtailed book purchases and the transition to digital online content was beyond the initial gestation stage. (See The report targets: will private equity accelerate the migration to digital content delivery in education? november 2012.) With a purchase price of $ 2.3 billion at the time, McGraw Hill Education was seen as a struggling asset in need of new direction and systemic turnaround.

Lest there be any doubt about the move to digital delivery of educational content, Apollo’s lead partner who announced the sale to Platinum Equity praised the McGraw Hill team for ” extraordinary agility and innovation in transforming the business from a print-centric organization to one that today delivers compelling, intuitive and effective digital products that contribute to student success. Under Apollo ownership, McGraw Hill has acquired six digitally focused acquisitions that feature recurring revenues and higher margins. The company now generates more than $ 1 billion a year from digital products, which is over 60% of total revenue, down from just 25% when Apollo initially acquired the education division of McGraw Hill. Even more impressive, digital products now account for 80% of revenue in McGraw Hill’s business segment serving higher education.

Platinum’s stated mission upon acquiring McGraw Hill is to continue the company’s commitment to supporting education globally, with a clear focus on investing in learning tools. digital. Thinking back to the past year of forced e-learning, it’s a safe bet that printed textbooks, although they do not fully follow the path of telephone books, will increasingly be used as the basic tool for learning. learning in the future.

Direct mail

Cathedral Corporation, a direct mail company based in upstate New York, announced the acquisition of Letter concepts. The acquired Connecticut-based business is a highly specialized direct mail business, providing personalized, targeted and segmented direct mail fundraising campaigns for Catholic dioceses. You might call it a wedding in heaven, as the cathedral itself has over a century of experience providing fundraising support services to Catholic churches and dioceses. Cathedral and its new acquisition meet the specific needs of their target market with a mix of additional products and services that include, among others, offer envelopes, pledge reminder mailings, online donation websites , mobile donation applications, contribution tracking, check depositing, safe services and social media advertising.

In another, but diametrically different, example of acquiring a direct mail business that serves a highly targeted and defined vertical market, Intellus acquired the South Jersey-based company Direct Maple. The acquired company specializes in marketing for the casino games industry. With its offset printing, digital printing and laser personalization imaging capabilities, Maple has additional locations in Arizona, Florida and Louisiana. Intellus was formed in 2019 when IBS Direct purchased ClientLink, a direct mail and order fulfillment company in Montgomeryville, Pa., A year after Logan Marketing Group acquired IBS Direct. With the addition of Maple Direct, Intellus now presents itself as a fully integrated marketing organization.

Specialty Print Communications, aka SPC, located in Niles, Illinois, purchased Marketing Fuel Pop. The company announced that the acquisition expands its strong print and mailing capabilities into a “fully integrated marketing toolkit”. The acquired company provides digital marketing creation, hyper-targeting and integration services.

View the Target report online, with transaction logs and source links for June 2021.

www.graphicartsadvisors.com


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