Transcontinental turns to plastic packaging to boost business

Transcontinental Inc. is a Montreal-based printing company specializes in print and digital media, the production of magazines, newspapers, and more. But like so many companies in the space, the company is experiencing declines in traditional printing and soft advertising in its media division. The company's revenue decreased by 5.0% in the first quarter of 2014, from $525.6 to $499.3 million, primarily due to the soft advertising market, which affected both of its operating sectors. In the printing sector, the volume in its marketing products and magazine operations decreased. In the media sector, the soft advertising market continued to impact its local solutions, magazines and interactive marketing solutions. 

So Transcontinental decided to make a bold move: acquire a plastic packaging company. The company will buy the assets of Capri Packaging, a supplier of printed flexible packaging, located in Clinton, MO, for a purchase price of $133 million. Capri Packaging is a division of Schreiber Foods Inc., a $5 billion employee-owned dairy company, located in Green Bay, WI. Capri Packaging offers flexible film structures (for example, the plastic film that's wrapped around blocks of cheese or the bags that shredded cheese comes in) for products worldwide, according to the company website. Capri Packaging says it doesn't just offer packaging for dairy as the company develops packaging for everything from disposable razors to coffee to wet wipes.

TC Transcontinental will gain two facilities in Clinton, which employ close to 200 people, and generate approximately $72 million in annual revenue. As part of the transaction, the seller, Schreiber Foods has signed a 10-year agreement to secure Capri Packaging as a strategic supplier of printed flexible packaging, which represents about 75% of Capri's total revenue.

In a statement, François Olivier, president and CEO of Transcontinental, called this move a "natural fit."  

"This acquisition represents an important strategic move for the corporation into a new promising growth area. It is part of our strategy to ensure our future growth path through diversification. Over the past year we evaluated various industries where we could leverage our manufacturing competency, a great success for us in the past. The printed flexible packaging industry was rapidly identified as a natural fit given that the production process is very similar to TC Transcontinental's printing operations and the market offers many opportunities for growth. We are very excited to partner with Schreiber Foods Inc. for the long term, which will provide us with a recurring revenue stream, and look forward to fostering our relationship over the coming years," he said.

— Heather Caliendo